Will I recover the entire sum of money that I lost from my account because of online bank fraud?

The Code of Bank’s Commitment to Customers says that you will have to be reimbursed by the bank, if you inform the bank promptly. Your maximum loss should never be more than Rs. 25,000 – for example, for a fraudulent withdrawal of INR 50,000 the bank will make good your loss of INR. 25,000, and you will only have to bear the loss of INR 25,000. This limit will NOT apply if you have acted fraudulently or negligently or have contributed to the disclosure of/unauthorized access to information.

Who is a consumer?

Consumers are people who1 buy and use goods or services.  Consumers have a right to file a complaint for any of the services or goods used by them:

Person buying and using goods and services

A consumer includes any person who buys goods and services, as well as anyone who uses them. For instance, a person who watches a movie after buying a movie ticket is a consumer and similarly, a person who uses a gift voucher gifted from someone else  is also a consumer.

Person using goods for self-employment, and not for commercial purposes

The consumer protection law does not apply to people who use goods and services for commercial purposes. However, there are some exceptions to this. For example, a person who buys large machines for using it in their business, is not a ‘consumer’. However, people who use goods for self-employment are considered as consumers2.  For example, artists who buy art supplies for their work or beauticians who buy beauty products are consumers.

Person using online facilities

A consumer also includes any person who buys or hires goods or services online. For example, if you order from an online clothes website, you are a consumer.3

People facing issues related to food

Consumers also include people who may be facing issues related to food items, such as adulteration, poor quality, lack of service, etc.4 For instance, issues related to food can cover problems across a wide range of products, starting from water that goes into the production of items like  juices as well as the sale of animals like chicken, mutton etc. that are expressly intended for human consumption5

 

  1. Section 2(7), Consumer Protection Act, 2019.[]
  2. Section 2(7)(i), Consumer Protection Act, 2019.[]
  3. Explanation (b), Section 2(7), Consumer Protection Act, 2019.[]
  4. Section 2(21), Consumer Protection Act, 2019.[]
  5. Section 3(j), Food Safety and Standards Act, 2006.[]

What are consumer rights?

Consumers who are unaware of their rights are vulnerable to the marketplace. It is vital for consumers to be aware of their rights so that they can make choices confidently, and with due regard to their interests. Consumer Rights include, but are not limited to, the following ((Consumer Rights, Department of Consumer Affairs, accessed at https://consumeraffairs.nic.in/organisation-and-units/division/consumer-protection-unit/consumer-rights:

Right to protection against goods and services which are hazardous to life and property

Goods should not only meet the consumers’ immediate needs, but also fulfill long-term interests, and the use of goods and services  should not result in any harm to consumers. For instance, if a person uses a medicine that cures an immediate ailment such as the flu, but the medicine causes worse side-effects, then they can file a consumer complaint.

Right to be informed

Consumers have the right to be informed about the quality, quantity, potency, purity, standard and price of goods. This right ensures that sellers put out authentic information on the product labels and do not make claims which are not true.

The government also publishes a price monitoring list for essential commodities along with Mandi prices, daily price reports, educational material on consumers’ digital safety etc. Some state Governments, such as Tamil Nadu, have also published advisories to educate consumers.

Right to choose a variety of items at competitive prices, wherever possible

Consumers have the right to get basic goods and services at fair prices. For example, you have the right to buy medicines either from the hospital medical store or from general stores at fair prices.

Right to file a complaint at Consumer Redressal Forums

Consumers have the legal right to use Redressal Forums to file their complaints. Every consumer has a right to file a complaint and be heard so that the grievance can be resolved.

Right to seek redressal against unfair trade practices

Unfair trade practices usually relate to cheating, deceiving, or defrauding the consumer through schemes, advertisements etc. The law protects consumers from being exploited and creates a system for the consumer to claim a fair settlement through the redressal forums.

    Lodging a complaint with the Bank

    Most banks have staff dedicated to matters like this. The relevant contact details are found on the backside of your card as well as the website of the bank. Telephone numbers of help desks are also displayed at every ATM machine.

    If you have suffered a loss you must immediately contact the banks via phone (preferably) or email. Do not forget to note the complaint number and follow up your complaint using the same number. The bank should acknowledge your email.

    The Code of Bank’s Commitment to Customers (CBCC) enacted by the Banking Codes and Standards Board of India (BCSBI) mandates each bank branch to display the name of the official at the bank branch responsible for addressing customer grievances.

    If your complaint is unresolved at the branch level, you may approach the Regional or Zonal Manager or the Principal Nodal Officer (PNO) at the address displayed at the branch.

    Typically, within 30 days of receiving the complaint, the bank will send you a final response or explain why more time is needed to investigate. The Bank will also tell you the process to take the complaint forward in the event you are still unsatisfied after the final response from the bank.

    What is Consumer Welfare Fund?

    The overall objective of the Consumer Welfare Fund(CWF) is to provide financial assistance to promote and protect the welfare of the consumers and strengthen the consumer movement in the country1. There are certain rules in place which govern the use of the CWF. Some of them are2:

    • Consumer awareness projects with wide coverage and adopting best international practices will receive priority for funding from CWF.
    • The Government will focus on rural and disadvantaged consumers and schemes to protect them when using the CWF. For this, projects relating to rural consumers and their empowerment3, and such organizations that work for rural consumers (which also have large participation of women and socially marginalized groups)4, will receive special focus.
    • The CWF is also to be disbursed among the States and Union Territories, to create regional Consumer Welfare Funds, to fund welfare activities.
    • There is a marked effort towards contributing to the CWF through the corporate social responsibility funds that are earmarked by companies.
    • Innovative projects for consumer awareness and education, setting up training and research facilities for consumer education, projects relating to the rural consumer empowerment, Consumer Clubs in schools/colleges/Universities, setting up of Consumer Guidance Bureau at the State/ regional level for counselling and guidance, product testing labs, creating Centres of Excellence in Universities, meeting expenses on advocacy and class action suits, etc. get priority.

    Applying for financial aid under the CWF

    Calls for proposals seeking financial aid from the Consumer Welfare Fund are online, twice a year usually in the months of January & July. The appropriate notice and format of inviting proposals will be issued and published on the Consumer Department website. You can also download the application form for grants from Consumer Welfare Fund from the Consumer Department website5.

    However, the Appraisal Committee can reject an application, for reasons including not meeting the eligibility criteria, incomplete forms trying to receive funds for the same venture through multiple Government forums, etc6.

     

    1. Section II, Consumer Welfare Fund Guidelines, 2019[]
    2. Section III, Consumer Welfare Fund Guidelines, 2019[]
    3. Section IV, Consumer Welfare Fund Guidelines, 2019[]
    4. Section V, Consumer Welfare Fund Guidelines, 2019[]
    5. Section VIII, Consumer Welfare Fund Guidelines, 2019[]
    6. Department of Consumer Affairs, Consumer Welfare Guidelines, https://consumeraffairs.nic.in/sites/default/files/file-uploads/guidlines-2014/CWF%20Guidelines%202014.pdf. []

    Filing a complaint with the Banking Ombudsman

    If you are not satisfied with the solution provided by the bank and would like to further enquire the matter, you can approach the Banking Ombudsman established by the Reserve Bank of India under the Banking Ombudsman Scheme, 2006. Each bank is required to display at its branch the details of the Banking Ombudsman under whose jurisdiction the branch falls. Complaints may be lodged with the respective Banking Ombudsman here.

    You can only do this once you have tried to settle matters with the bank, and failed. If you file a case in Court, such as the Consumer Court, you cannot approach the Ombudsman while the case is going on.

    If you are not satisfied with the decision of the Banking Ombudsman, you may approach the appellate authority against the Ombudsman’s decision – the Deputy Governor who is in charge of dealing with the implementation of the Banking Ombudsman Scheme, Reserve Bank of India. This appeal must be made within 30 days of the Ombudsman’s decision.

    Types of Consumer Complaints

    Every person has a right to file the following types of consumer complaints under consumer protection law:

    E-commerce complaints

    “E-commerce” means buying or selling goods or services (including digital products) over digital or electronic networks1. It includes the production, distribution, marketing, sale or delivery of goods and services by electronic means 2. 

    E-commerce entities, such as online shopping websites like Flipkart 3 and Amazon4 , have long been treated as service providers who work for a profit5. They have been held liable whenever there has been a violation of consumer rights. One of the major reforms brought about by the Consumer Protection Act, 2019 is that it lays down a set of rules to govern these e-commerce entities6:

    • E-commerce entities will have to respond within 48 hours of complaint.
    • Complaints can be made from any place, regardless of where the purchase was made.
    • E-commerce entities such as Amazon, Flipkart, are now required to display the details of the sellers, such as their legal name, geographic address, contact details, etc.
    • These entities must not directly or indirectly manipulate the goods’ prices, and must not adopt any unfair or deceptive methods of sale.
    • They are prohibited from exaggerating the qualities of a product, and posting fake reviews.
    • The law mandates the protection of consumers’ personal information so that personal details are kept confidential and the privacy of consumers is protected.

    Complaints about misleading advertisements 

    An advertisement is a promotion through television, radio, or any other electronic media, newspapers, banners, posters, handbills, wall-writing etc. A misleading advertisement says untrue things about the goods and services, which can mislead the consumer in  buying them(( Misleading Advertisements, Department of Consumer Affairs, accessed at https://consumeraffairs.nic.in/more/misleading-advertisements. These advertisements may make false claims about a product or services’ usefulness7 , quality and quantity8, or deliberately conceal important information about the product9 (such as known side-effects), etc. Advertisers can be sued for making misleading claims in their advertisements. These include claims of being the first toothpaste to have a certain beneficial composition when it actually isn’t10, or advertising schemes that seek to increase profits without passing on the benefit to the consumers11, etc. 

    Complaints about unfair trade practices

    Unfair trade practices have a broad definition under the consumer protection law. They include false statements about the goods’ standard, quality and quantity, and the marketing of used/second-hand goods as new goods. It also includes false claims about a warranty, or the warranty period being scientifically untested, etc. This has resulted in several lawsuits, one involving a noodle-maker labelling its packets with false lead content12, replacing the labels of pharmaceutical drugs to extend the expiry period13, marketing adulterated goods with different ingredients than stated on the label14, etc.

    Complaints about restrictive trade practices

    Restrictive trade practice means a trade practice which tends to manipulate the price, or delivery, of goods, which affect the flow of supplies in the market. This leads to the consumers facing unfair costs or restrictions. This is usually done in some of the following ways: price fixing, dealing exclusively, restricting the resale values of sold goods, mandating that buying one good or service entails buying other goods or services. One real-life example of this is the inbuilt price of delivery and fixing electronic goods. This ensures that the consumer ends up paying for the service, whether they want to or not, making them bear unfair costs.

    Complaints about defective goods

    Defective goods are goods15 with any fault, imperfection or shortcoming in the quality, quantity, purity or standard which is required to be maintained by the seller, under the law in force. Some examples are adulterated or imperfectly brewed beverages, malfunctioning machinery, misshapen artifacts, etc.

    Complaints about spurious goods

    Spurious goods are those which are falsely claimed to be genuine16 or are fake or imitative of real, original goods. These are often of inferior quality and infringe upon the trademarks and copyrights of legal owners of the original goods. A crucial example is that of medicines or cheap make-up products found in local markets. Often, spurious medicines are marketed under another drug’s name, or imitate/substitute another drug in a deceptive way17.

    Charging above the MRP (Maximum Retail Price)

    Overcharging generally occurs in covert ways, when sellers charge the consumer more than what is prescribed as the Maximum Retail Price of a product. It is a gross violation of consumer rights.

    Complaints about food

    Presently, the law also addresses grievances related to food products. For example, customers can file their grievances about packaged food like the presence of adulterant, expired goods, missing FSSAI license, etc. or serving issues like the lack of hygiene, presence of pests, etc. at the Food Safety Connect Portal.

     

    1. Section 2(16), Consumer Protection Act, 2019.[]
    2. Electronic Commerce, WTO, accessed at https://www.wto.org/english/thewto_e/minist_e/mc11_e/briefing_notes_e/bfecom_e.htm#:~:text=Electronic%20commerce%2C%20or%20e%2Dcommerce,and%20services%20by%20electronic%20means%22.&text=These%20WTO%20bodies%20were%20instructed,WTO%20agreements%20and%20e%2Dcommerce.[]
    3. Ajay Kumar v. Flipkart Internet Private Limited, 2018 SCC OnLine NCDRC 549.[]
    4. Kent RO Systems v. Amazon Seller Services, 2017 SCC OnLine Del 8016.[]
    5. Rediff.Com India Limited v. Ms. Urmil Munjal, 2013(2) C.P.C. 536.[]
    6. Consumer Protection (E-Commerce Rules), 2020.[]
    7. Section 2(47)(f), Consumer Protection Act, 2019[]
    8. Section 2(28)(ii), Consumer Protection Act, 2019[]
    9. Section 2(28)(iv), Consumer Protection Act, 2019[]
    10. Colgate Palmolive (India) Ltd. v. Anchor Health & Beauty Care P. Ltd., (2008) 7 MLJ 1119.[]
    11. Society of Catalysts v. Vodafone Essar Mobile Services Limited, LNIND 2008 SCDRCD 962.[]
    12. M/S Nestle India Limited v. The Food Safety and Standards Authority of India, W.P. L. No. 1688 of 2015.[]
    13. Pooja Roy v. Krishnango Bhattacharya, C.R.R 2796 of 2008, Calcutta H.C.[]
    14. Consumer Guidance Society v. Amway India Enterprises, (2007) C.C 140 of 2007.[]
    15. Sections 2(10) and 2(11), Consumer Protection Act, 2019.[]
    16. Section 2(43), Consumer Protection Act, 2019[]
    17. Drugs and Cosmetics FAQs, Integrated Grievance Redressal Mechanism, accessed at https://consumerhelpline.gov.in/faq-details.php?fid=Drugs%20and%20Cosmetics.[]

    Who can complain?

    A complaint 1 about a product or service can be filed by 2 a number of persons under the law, such as:

    • People who buy goods or use services for themselves or for their own work in exchange for a payment. 3 For example, if a person takes an Uber cab to work, they are a consumer of a service. If a person buys a car to use it as a taxi and drives it themselves for earning their livelihood, they are a consumer of goods.
    • People who use the goods and services with the permission of the buyer who bought such goods for self-consumption or self-employment in exchange of a payment. For example, if a person buys a soap and that soap is used by their family members. All these people are consumers of the soap and can file a complaint in case of any defect in the soap.
    • A person who buys goods for commercial purposes can file a complaint during the warranty period of the goods 4. For example, if a person buys a computer system for their company and finds any defect in the system within the warranty period of the system, they will be a consumer.
    • Multiple consumers 5 who share similar grievances or issues. For example, if multiple people wish to complain about the service standards at a restaurant.
    • A registered or recognized voluntary association of consumers 6 can also file a complaint.
    • Legal guardian of a consumer who is a minor. Legal guardian includes a parent or a relative or a person lawfully bestowed with parental obligations.
    • Legal representative of a consumer in case the consumer has passed away.
    • The Central or State Government can file a complaint.
    • The Central Consumer Protection Authority can take notice of a consumer grievance under the direction of the Central Government7. Under the law, this is known as the power to take a case suo motu (on its own) 88.
    1. Section 2(6), Consumer Protection Act, 2019.[]
    2. Section 2(5), Consumer Protection Act, 2019.[]
    3. Section 2(7),The Consumer Protection Act, 2019 (Act 35 of 2019[]
    4. Super Computer Centre vs Globiz Investment Pvt. Ltd., 3 (2006) CPJ 256 NC[]
    5. Section 2(7), Consumer Protection Act, 2019.[]
    6. Section 35(1)(b), Consumer Protection Act, 2019.[]
    7. Section 18(2)(a), Consumer Protection Act, 2019.[]
    8. Section 18(2)(a), Consumer Protection Act, 2019.[]

    Banks’ responsibility to prevent Online Bank Fraud

    Banks must ask their customers to mandatorily register for SMS alerts for electronic banking transactions. Wherever available, they must ask their customers to register for e-mail alerts, for electronic banking transactions.

    The SMS alerts shall mandatorily be sent to the customers, while email alerts may be sent, wherever registered in the event of an electronic banking transaction. To facilitate the customers to report any unauthorized use of their electronic banking services, banks must provide customers with 24×7 access through multiple channels (at a minimum, via website, phone banking, SMS, e-mail, Instant Voice Response, a dedicated toll-free helpline, reporting to home branch, etc.) for reporting unauthorised transactions that have taken place and/ or loss or theft of payment instrument such as card, etc. Banks have to also enable customers to instantly respond by ‘Reply’ to the SMS and e-mail alerts so that the customers are not required to search for a web page or an e-mail address to notify the objection to an electronic transaction.

    Banks have to also provide a direct link for lodging the complaints, with specific option to report unauthorised electronic transactions on the home page of their website. The loss/ fraud reporting system should ensure that immediate response (including auto response) is sent to the customers acknowledging the complaint along with the registered complaint number. The banks must record the time and date of delivery of the alerts and receipt of customer’s response, if any.

    The banks cannot offer the facility of electronic transactions, other than ATM cash withdrawals, to customers who do not provide mobile numbers to the bank. On receipt of report of an unauthorised transaction from the customer, banks must take immediate steps to prevent further unauthorised transactions in the account.