Bank fined ₹1L for wrongfully blocking wellness entrepreneur’s credit cards

MUMBAI: Thane's Consumer Commission orders American Express to pay ₹1 lakh to Dr Rekha Choudhary for wrongfully blocking her credit cards without notice.

MUMBAI: The Additional District Consumer Commission of Thane has directed American Express Banking Corporation, a multinational bank, to pay ₹1 lakh in compensation to Dr Rekha Choudhary, a prominent figure in the beauty and wellness industry, for wrongfully blocking her primary and supplementary credit cards without prior intimation.

Bank fined ₹1L for wrongfully blocking wellness entrepreneur’s credit cards

Dr Choudhary had approached the commission, seeking the restoration of her American Express (AMEX) credit cards and ₹1 crore in damages for the alleged wrongful blocking, which she claimed had caused financial losses to her and her company, One Line Wellness Private Limited.

In her complaint, filed through advocate Shobhana Gopal of LR & Associates, Dr Choudhary recounted that in December 2019, while attempting to pay a bill at a coffee shop and later while booking an urgent flight ticket to Delhi, she discovered that her primary AMEX credit card had been blocked. Following a call to the bank, the card was restored.

However, on January 24, 2020, the bank blocked a supplementary credit card issued in the name of Naveen CB Shankar, citing non-compliance with Know Your Customer (KYC) requirements. Dr Choudhary contended that she had already submitted the necessary KYC documents on January 16, 2020, and the bank had acknowledged receipt of the same.

The timing of the blockage, according to her complaint, was particularly damaging as it coincided with her scheduled online sale on Shopify, where the blocked card was linked for payment processing. Matters escalated further when the bank blocked her primary card in March 2020 and, the following month, cancelled all associated cards, citing outstanding dues of ₹11.50 lakh. However, the commission noted that Dr Choudhary had settled these dues on September 8, 2020.

American Express defended its actions, stating that the credit cards were blocked due to the non-submission of requisite KYC details on the Central KYC (CKYC) portal and that the move was in accordance with Reserve Bank of India (RBI) guidelines.

A bench comprising commission president Tushar Menkudale and members Yogesh Kapse and Anushka Shreshtha, however, found that the bank had failed to produce any documents to substantiate its claim that Dr Choudhary had not furnished the KYC details on the CKYC portal. The commission also questioned the bank’s adherence to RBI guidelines, noting that the supplementary card had been unblocked following a mere telephone call from Dr Choudhary. This raised doubts about the bank’s claim that its actions were strictly in line with regulatory requirements.

Given these findings, the commission ruled that there was a deficiency in service on the bank’s part and directed it to pay ₹1 lakh in compensation to Dr Choudhary. However, the commission declined her request for the restoration of the credit cards, citing their expiration as a reason for non-reinstatement.

When contacted, advocate Pranita Kelkar, who represented the bank, said the order is sent directly to the parties and thereafter the management evaluates the pros and cons and decides to file an appeal or otherwise. Since the period of limitation is 45 days from the date of receipt of order, the client will take a call.