Banks responsible for card, PIN delivery

PERSONAL FINANCE

In case of misuse of debit cards, banks cannot escape responsibility by saying that they have delivered the card and the personal identification number (PIN) at the address mentioned in the application.

A bank customer has approached the Ombudsman with a complaint about withdrawal of funds through unauthorised use of his card. The complainant said that he had asked for a debit card and the bank responded by issuing a card with zero liability.

Though he did not receive the card, he found that Rs 25,000 was debited from his account. On enquiry from the bank, he gathered that the card was delivered to a security staff in his office building, without checking the identification particulars.

The PIN was also delivered to another staff in his office. This prompted the ‘card holder’ to seek a refund from the bank, a plea that was turned down.

On its part, the bank submitted papers mentioning that the card and PIN had been delivered at the mailing address mentioned by the customer. While the card was delivered to one person, the PIN was handed over to another person on the same address.

The bank also reiterated that the debit card was used at the ATM, indicating that money was withdrawn by an ‘authorised person’. While maintaining that the transactions were valid, the bank said that it was not liable or responsible for any consequences.

The Ombudsman, however, ruled that the bank could not escape responsibility by stating that the card and PIN were delivered at the mailing address of the complainant to ‘unauthorized’ persons, increasing the risk of misuse by them. It said that the card and PIN should have been delivered to the complainant in person or to his authorised representative only under his proper acknowledgement.

The Ombudsman asked the bank to not only reimburse the Rs 25,000 withdrawn from the complainants account but also pay interest at savings bank rate and an additional amount to meet the expenses relating to follow-up of the complaint.