Bank fined for lax security resulting in online fraud

Pune: Wadgaon Budruk resident Preeti Borghare was in for a shock when she received an SMS alerting her of an online transaction for Rs 4,930.72 from her savings bank account shortly after midnight on October 18, 2014.
Before she could realise what was happening, she received another alert for a transaction of Rs 4,171.95 at 1.24am. Alarmed, Borghare called the bank's customer care centre, but before her call could be connected, she received yet another alert of a third transaction for Rs 4,870.42 at 1.49am.
Apparently, unknown fraudsters had siphoned off a total of Rs 13,972.91 before she could get her savings account blocked. Borghare lodged an FIR the next morning and a probe by the city police's cyber crime cell revealed that all the three transactions had been done from different cities in Germany.
The Pune district consumer court has now directed the Rasta Peth branch of the Bank of Maharashtra, where Borghare held an account, to refund Rs 13.972.91 with 5% interest per annum and pay her Rs 15,000 in damages for deficient service on account of loopholes in its system. The interest component on the refund works out to Rs 1,365 so far and will increase till realization of the payment.
In a ruling on June 27, the bench of consumer court president V P Utpat and expert member Kshitija Kulkarni also dismissed the bank's claim that the complaint cannot be entertained as the matter was under investigation by the cyber crime cell. "Even though cyber crime is registered regarding the disputed transactions, this fact itself is not sufficient to hold that the consumer forum is barred from taking cognizance of the present dispute," the bench observed.
Borghare had stated in her complaint that post-fraud she had not received information about the transactions from the bank as Diwali holidays were on till October 25, 2014. When she approached the bank on October 27, 2014, she was told that these were online transactions done from various cities in Germany and did not involve swiping of the ATM card.
However, she had not received any one-time passwords (OTPs) for the transactions. The fact that the transactions were done in Germany during an intervening night and she had not used her ATM card, established that the transactions were not done by her, she stated. The bank did not give any satisfactory reply to her legal notice, prompting Borghare to approach the consumer court.
The bank denied any deficiency in service and argued that the disputed transactions were being investigated by the police. As such, it contended that the consumer court cannot take cognisance of the complaint. The bank also argued that Borghare was holding the ATM card as well as the password and as such, she was responsible for the transactions.
The bench dismissed these arguments while observing that the explanation put forth by the bank in its written statement and oral arguments was not satisfactory and sufficient. "It reveals from the record that the opposite party (bank) has no foolproof security system and the system which is operated by the bank has many loopholes and that amounts to deficiency in service," the bench ruled.
The bench has given 45 days' time from the date of receipt of the order for the bank to comply with the ruling or pay 9% per annum interest on the entire amount in case of non-compliance of the order.