Kerala Consumer Commission Orders Federal Bank To Refund Rs 9,854 To UPI Fraud Victim

A scratch card claiming to offer PhonePe cashback on social media resulted in two unauthorised transactions from a Federal Bank customer’s account in 2021. Five years after the incident, the Thiruvananthapuram District Consumer Disputes Redressal Commission, in an order dated August 5, 2026, ruled in favour of the customer and held the bank liable for the loss.

What Happened In The Case

According to the complaint, Ramesh B Nair came across a scratch card on social media on July 13, 2021, which states that Unlimited cash Back and displays the PhonePe logo and font. As Nair was a subscriber of Google Pay and PhonePe and was familiar with receiving scratch cards from them, he scratched the card twice.

Soon after, Rs 4,885 and Rs 4,969 were debited from his Federal Bank account, taking the total disputed amount to Rs 9,854. Nair said he had not provided his account credentials or received any OTP from the bank for the transactions. After receiving the debit alerts, he immediately complained to the bank and also filed a complaint with the Kattakada Police on July 15, 2021.

The bank initially credited the two amounts back to his account on July 15. However, Nair later found that the bank had reversed the Rs 9,854 on August 4, 2021. He subsequently approached the Banking Ombudsman.

Federal Bank, in its defence, said it had no role in the scratch-card transaction. It also argued that Nair was actively carrying out UPI transactions and was aware of the importance of keeping his UPI credentials confidential.

“The UPI credentials are within the exclusive knowledge of the complainant and without which the impugned transactions cannot occur,” the bank said, according to the order. The bank further argued that a UPI transaction requires the payment address and UPI PIN, claiming that either Nair or someone with whom he had shared his credentials had carried out the transactions. It maintained that Nair was solely responsible for the alleged loss.

What Did The Consumer Commission Observe

The Commission found that the bank’s case was based on the presumption that Nair had unknowingly shared his OTP with a third party, but there was no material to substantiate the claim. “The bank must prove that the account holder was negligent i.e intentionally sharing a PIN or OTP, to deny liability,” the Commission observed.

It also noted that Nair had taken all necessary steps after becoming aware of the unauthorised transactions. “The diligent acts of the complainant clearly show that he had taken all the necessary steps upon coming to know of the unauthorised transactions,” the Commission said.

The Commission found no credible material to establish negligence on Nair’s part.

“There being no credible material to substantiate the perceived negligence on the part of the complainant, we find that as per the RBI circular, the Bank is bound to recredit the amount back to the account of the complainant,” the Commission said.

The Commission also referred to the Supreme Court’s decision in State Bank of India vs. Pallabh Bhowmik. In its order, the Commission said that the Supreme Court had emphasised that “banks carry an absolute responsibility to protect accounts from unauthorised electronic banking fraud, especially when the customer reports the issue within 24 to 48 hours.”

The Commission found a deficiency in service on the part of Federal Bank and said Nair had suffered financial loss and mental agony. The three-member bench comprised President P.V. Jayarajan and members Preetha G. Nair and Viju V.R.

The Commission directed Federal Bank to remit Rs 9,854 to Nair’s account, along with Rs 5,000 as compensation and Rs 3,000 towards the cost of proceedings, within 30 days of receiving the order. If the bank fails to comply, the amount excluding the cost of proceedings will carry interest at 9 per cent per annum from the date of the order until payment.