Nagpur Consumer Commission Holds ICICI Bank Liable in Cyber Fraud Case

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The Nagpur District Consumer Disputes Redressal Commission has ruled that ICICI Bank must reimburse a victim of a digital fraud scheme, ordering the payment of ₹5,18,437 along with interest.

Case Overview

The Nagpur District Consumer Disputes Redressal Commission has ruled that ICICI Bank must reimburse a victim of a digital fraud scheme, ordering the payment of ₹5,18,437 along with interest. The decision underscores the bank’s responsibility to monitor transactions for anomalies, even when customers authorize payments via one-time passwords (OTPs).

Victim’s Experience

The case involved Prachi Digambar Dhoke, who maintained a savings account with ICICI Bank. On January 8, 2023, she received a call from an individual claiming to represent FedEx. The caller alleged that a package in her name contained illicit items, including passports, ATM cards, and narcotics, and then connected her to individuals posing as Mumbai Police officers. These impersonators pressured her to transfer funds as “investigation fees,” leading her to execute four transactions totaling ₹6,93,437.50 into an ICICI Bank account. Upon realizing the deception, the victim reported the incident to the bank, filed a complaint on the National Cyber Crime Reporting Portal, and sought recourse through the Banking Ombudsman.

Bank’s Response

The bank initially provided a temporary credit but later reversed the transaction, citing OTP authentication as justification. The Ombudsman directed the bank to credit 25% of the disputed amount, prompting the victim to escalate the matter to the Consumer Commission.

Bank’s Defense

ICICI Bank contested the case, arguing that the matter fell under criminal jurisdiction and that the victim’s use of OTPs absolved the institution of liability. It also referenced the Ombudsman’s prior ruling.

Commission’s Findings

The Commission rejected these claims, emphasizing that the bank’s compliance with Reserve Bank of India (RBI) guidelines on know-your-customer (KYC) procedures and transaction monitoring constituted a consumer dispute. Key findings highlighted the suspicious nature of the transactions. The beneficiary account, which had been dormant, processed approximately ₹2.84 crore within two days. The Commission noted that such activity should have triggered heightened scrutiny under RBI regulations. However, ICICI Bank failed to demonstrate adequate monitoring or intervention.

Ruling Details

The ruling determined that the bank’s failure to detect and prevent the fraudulent transactions constituted negligence, deficiency in service, and unfair trade practices. The Commission ordered the bank to pay the remaining ₹5,18,437, plus 9% annual interest from the complaint filing date. Additional compensation of ₹25,000 was awarded for emotional distress, and ₹10,000 was allocated for litigation costs, with a 45-day compliance deadline.

Implications

The decision reinforces the obligation of financial institutions to proactively identify and address irregularities in customer accounts, even when transactions are authorized through standard security measures. It also clarifies that regulatory bodies can adjudicate disputes involving cyber fraud, provided they assess institutional compliance with established safeguards.