Mumbai, March 9 The state consumer commission here has directed Bank of India to pay Rs 5 lakh as compensation to a senior citizen for "deficiency in service" related to unauthorized ATM transactions.
In its recent order, the State Consumer Disputes Redressal Commission emphasized that for elderly and less-literate customers, the standard of care expected from the service provider is "naturally higher".
It also noted that the "determination of deficiency in consumer jurisdiction does not proceed on the footing that every unauthorized transaction automatically fastens liability on the bank." However, at the same time, banks have a corresponding duty to adhere to basic security protocols when issuing and activating ATM-cum-debit facilities, it remarked.
"In cases involving elderly customers with limited literacy, the standard of care expected from the service provider is naturally higher, and strict compliance with safeguards becomes all the more material," the commission stated.
The complainant, a 65-year-old housewife with formal education up to Standard IV, opened a savings account with the bank in May 2010. She alleged that her account, which contained funds from the sale of her residential property, was depleted of Rs 12,47,402 through unauthorized ATM cash withdrawals used for purchases such as gold jewellery, wines, television set and other goods.
The complainant approached the commission alleging deficiency in banking service due to lapses in issuing/handling the ATM-cum-debit facility and safeguarding of the funds. The bank, however, categorically denied any deficiency and contended the account was opened as per norms.
The bank also stated that a 'welcome kit' containing a cheque book, ATM card/PIN and associated passwords was issued and the complainant had acknowledged its receipt.
The bank submitted that the unauthorized transactions occurred due to criminal acts of a third person and not due to a lapse on its part.
The commission, after hearing the pleadings and the rival submissions, acknowledged that a criminal case regarding the alleged fraudulent transactions is pending before the Metropolitan Magistrate in Bandra and the police have also recovered certain articles.
But the bank cannot escape responsibility only by saying that it was a crime committed by someone else, the state commission said.
It highlighted that the critical evidence in the case is the bank's own printed 'Kit Receipt / Acknowledgement Form' which, apart from listing the items said to be delivered, specifically confirmed that the customer signed on the signature band of the ATM Debit card in the presence of the officials.
The complainant, however, claimed that officials never actually obtained her signature on the card, despite certifying that it was signed in their presence.
"Such a recital is not ornamental. The purpose of the signature band is to affix the account holder's identity on the cards and to act as a minimum security step to prevent misuse," the commission noted.
If a customer refuses or is unable to sign, the bank is expected either to withhold issuance or to adopt alternative safeguards, the consumer commission stressed.
The entire responsibility for the unauthorized transactions cannot be placed solely on the bank but it also cannot escape accountability for deficiency in service in failing to ensure certification regarding signature band compliance and the basic safeguard, the commission ruled.
Concluding that the bank's deficiency in service aided to the complainant's loss and caused her serious hardship and mental stress, the commission directed it to pay a compensation of Rs 5 lakh. The bank has also been ordered to pay Rs 25,000 towards litigation costs.