The Supreme Court has upheld justice for a cyber fraud victim, directing the State Bank of India (SBI) to refund Rs 94,000 stolen during an online scam. The judgment highlights the bank’s accountability and failure to act promptly despite receiving timely fraud reports.
In a landmark judgment, the Supreme Court of India directed the State Bank of India (SBI) to refund Rs 94,000 to a victim of cyber fraud from Assam. The case has brought into sharp focus the responsibilities of financial institutions in safeguarding their customers’ funds against fraudulent activities.
The Incident
The cyber fraud occurred when the victim attempted to return a Louis Philippe blazer worth Rs 4,000. Posing as a customer service representative, the fraudster tricked the victim into installing a malicious app, leading to the theft of Rs 94,204 from his SBI savings account. The stolen money was transferred across multiple bank accounts via UPI transactions.
The root of the issue lay in a 2021 data breach on Louis Philippe’s website, which compromised sensitive customer details, including the victim’s contact information. Exploiting this data, the fraudster carried out the scam, leaving the victim with a blazer he no longer wanted and an empty bank account.
Legal Battle
After discovering the fraudulent transactions, the victim immediately contacted SBI to block his account and card. He also filed complaints with the Assam Police, the RBI Banking Ombudsman, and the Ministry of Home Affairs through its National Cyber Crime Reporting Portal. However, he faced resistance from SBI, which refused to take responsibility, citing the use of Google Pay—a third-party app not recommended by the bank.
Unyielding, the victim pursued legal remedies through the Gauhati High Court, which found SBI at fault for not taking timely action despite being informed within hours of the scam. The High Court ordered the bank to refund the full amount.
Supreme Court Verdict
SBI escalated the matter to the Supreme Court, challenging the High Court’s decision. However, the apex court upheld the previous judgment, emphasizing that the bank, equipped with advanced technology, failed to act promptly to prevent the fraud. The Supreme Court ordered SBI to refund the stolen amount and recover it from the fraudster, who had been apprehended by the Assam Police.
The court also highlighted the importance of vigilance by both banks and customers. While banks must utilize their technological resources to detect and prevent cyber fraud, customers are advised to exercise caution when sharing sensitive information or using third-party payment apps.
Key Observations
- SBI was informed of the fraud within hours but failed to take corrective action, such as lodging a chargeback request or initiating investigations.
- The bank’s argument, citing Google Pay’s third-party status, was rejected by the court, which held SBI accountable for protecting its customers’ interests.
- The judgment serves as a precedent, reinforcing the accountability of banks in cyber fraud cases and emphasizing timely action to mitigate losses.
Conclusion
This case underscores the increasing prevalence of cyber fraud and the need for both banks and customers to remain vigilant. The Supreme Court’s ruling has not only delivered justice to the victim but also set a benchmark for addressing cybercrime-related financial disputes, ensuring that victims are not left to bear the brunt of such crimes.
