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State asks banks, mobile operator to pay customers for security lapses

Two major banks along with a leading telecom company have been penalised by adjudicating officer Rajesh Aggarwal, principal secretary (Information Technology) of the state, on charges of defaulting on reasonable security practices and procedures leading to the financial losses of their customers in two different cases.

Advocate Gaurav Jachak. Pic/Mohan Patil
Advocate Gaurav Jachak. Pic/Mohan Patil 

In the first case filed by Pune-based entrepreneur Sanjay Khatavkar — owner of Shriniwas Signs, Aggarwal has asked one of the banks to pay Khatavkar Rs 12 lakh as compensation. In the second case filed by Mumbai resident Prashant Buradkar, Aggarwal has ordered another bank and the telco to pay Rs 6 lakh each as compensation.

Gaurav Jachak, counsel for Khatavkar and Buradkar, said, "In Khatavkar's case he had received a phishing email in the name of the bank's customer care. Khatavkar had entered in his username and password after which Rs 16.78 lakh was transferred from his account to different bank accounts in 62 separate transactions. When Khatavkar came to know that he was targeted by cyber criminals, he lodged a complaint at Kothrud police station."

"Police investigations revealed that the bank accounts in which the money was transferred were registered in fake names and addresses. The banks also failed to provide CCTV footage at the ATM centres from where the money was withdrawn by the suspects," Jachak added.

In Khatavkar's case Aggarwal stated that the bank did not submit a meaningful report from its Fraud Investigation Unit as mandated by RBI guidelines, nor did he receive any detailed report on various security mechanisms installed by the bank in order to secure their systems. "They have, without any evidence, passed on the blame for the fraudulent transactions to the customer," he said.

In Buradkar's case, his mobile was suddenly deactivated and after he called up the customer care centre, he was advised to replace the SIM card. Meanwhile, the suspects had already withdrawn Rs 10.5 lakh from his account.

Holding the bank and the telco responsible for Buradkar's loss, Aggarwal stated that they failed to provide basic security to their customer and without their negligence, the criminal activity would not have taken place.

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