Anonymous
Asked October 09, 2019

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Unauthorized transactions of 4000 Euros conducted via my stolen credit card in foreign trip. I reported that with in 3 hours of receiving notifications. The transactions happened before I could block my card. Raised the complaint to Standard chartered bank but they say liability will be mine, as transactions happened before blocking the card. I believe I should not be held liable as transactions were not authorized by me. Standard Chartered took over 8 months to investigate saying if transactions were not Authorized by any means they would reverse the disputed amount but they could not prove that as merchant bank is not entertaining their request to investigate and now they say in this case I will be liable. In this scenario what should I do? As per RBI circular on limited liability in case of unauthorized transactions I understand that i should not be held liable but I have written so may times to bank and they are not listening. I raised the case with RBI Banking ombudsman but I am afraid if I am right in assuming that I should not be held liable.

Answers 3

Greetings

As per the RBI circular referred by you the liability of a customer is zero and/or limited when the fault lies neither with the bank nor with the customer, but "lies elsewhere in the system". Over here emphasis needs to be given on the term 'System'. The Bank can try to interpret this and limit this to only those faults that have ocurred due to some technical glitch/error etc. and does not include third party interventions such as theft etc. The bank will try to prove that there has been negligence on your part since the burden of proving a customer's liability in case of unauthorised electronic banking transactions lies on the bank.

Furthermore, in the instant case since there has been an involvement of a third party the Bank is going to use the Clauses in the Credit Card form/declaration sheets which state that any financial loss arising out of unauthorized use of the Card till such time the Bank records the notice of loss of Card will be to the Card Holder's account. 

I would strongly suggest you to pursue this case after getting the case adjudicated before the Ombudsman since the amount involved is on a higher side. You have to argue that the RBI circular is not limited to only techincal faults etc but also those faults which have been trigerred due to the intervention of a third party by using fraudulent means. You would have to show that due care had been taken by you and no PIN etc was shared with anyone and inspite of that someone was able to withdraw funds without knowing the sensitive information. Therefore, there has been a deficiency on the part of the Bank.

Furthermore, since you have stated that the bank has admitted that it will reverse the transactions in case of no authorisation from your end, you can also argue that the same means that no authorisation was ever given from your end. The burden is on the bank to prove the aspect of authorisation and it has failed to do so. This would depend on the facts and circumstances under which the transaction took place. Since I do not have the complete facts, I cannot say anything conclusively on this aspect.

It will be tough proving and arguing these things, however if done the right way you may have Justice on your side.

If the Ombusdman adjudicates against you, you can file a complaint before the Consumer Forum. You can only file a complaint before the Consumer Forum once the Ombudsman decides the matter finally or you withdraw the same. You cannot approach the Consumer Forum at the same instance. 

Regards

Shah Rukh Ahmad

Agree Comment 0 Agrees 6 days ago
Consult Now

It is clear that the bank is not liable as your notice was received by the bank after the transaction had gone through. On what grounds can the bank be obliged to bear the loss? 

It is also in your interest to maintain proof that you were not at the place where the transaction was conducted, at the time of the transaction, to be safe of charges of attempted fraud.

Agree Comment 0 Agrees 5 days ago

Greetings

As per the RBI circular referred by you the liability of a customer is zero and/or limited when the fault lies neither with the bank nor with the customer, but "lies elsewhere in the system". Over here emphasis needs to be given on the term 'System'. The Bank can try to interpret this and limit this to only those faults that have ocurred due to some technical glitch/error etc. and does not include third party interventions such as theft etc. The bank will try to prove that there has been negligence on your part since the burden of proving a customer's liability in case of unauthorised electronic banking transactions lies on the bank.

Furthermore, in the instant case since there has been an involvement of a third party the Bank is going to use the Clauses in the Credit Card form/declaration sheets which state that any financial loss arising out of unauthorized use of the Card till such time the Bank records the notice of loss of Card will be to the Card Holder's account. 

I would strongly suggest you to pursue this case after getting the case adjudicated before the Ombudsman since the amount involved is on a higher side. You have to argue that the RBI circular is not limited to only techincal faults etc but also those faults which have been trigerred due to the intervention of a third party by using fraudulent means. You would have to show that due care had been taken by you and no PIN etc was shared with anyone and inspite of that someone was able to withdraw funds without knowing the sensitive information. Therefore, there has been a deficiency on the part of the Bank.

Furthermore, since you have stated that the bank has admitted that it will reverse the transactions in case of no authorisation from your end, you can also argue that the same means that no authorisation was ever given from your end. The burden is on the bank to prove the aspect of authorisation and it has failed to do so. This would depend on the facts and circumstances under which the transaction took place. Since I do not have the complete facts, I cannot say anything conclusively on this aspect.

It will be tough proving and arguing these things, however if done the right way you may have Justice on your side.

If the Ombusdman adjudicates against you, you can file a complaint before the Consumer Forum. You can only file a complaint before the Consumer Forum once the Ombudsman decides the matter finally or you withdraw the same. You cannot approach the Consumer Forum at the same instance. 

Regards

Shah Rukh Ahmad

Agree Comment 0 Agrees 5 days ago
Consult Now

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