Bank liable for wrong delivery of debit card
Pushpa Girimaji

Whether it is a new card or a renewed card, usually, credit cards, debit cards and ATM cards are all sent by banks to customers through a courier service. In all such cases the courier insists on delivering it to the person to whom the mail is addressed, and even there, asks for a photo identity card, such as a voter's card or a driving licence or a passport to confirm the identity of the person to whom it is being delivered.

But there could be instances where the card does not reach the addressee, and, in fact, gets into the wrong hands and is misused. In such cases, the courier may be at fault, but as far as the consumer is concerned, the bank has to take responsibility and make good the loss suffered by him. Later, it is up to the bank to sue the courier and recover that money.

A case decided by the banking Ombudsman highlights this point. In fact the Ombudsman in this case has set clear guidelines to the banks on the delivery of such cards and PINs. The bank has to ensure that they are not delivered to unauthorised persons, but to the client himself or herself, the Ombudsman has said. In case for some reason, this is not possible, then it has to be delivered to someone duly authorised by the customer and not to anyone else, the Ombudsman has clarified. In fact even here, the identity of the duly authorised person has to be checked before delivery.

Thus, this particular order of the banking Ombudsman should force banks to take proper precautions to ensure that the card and the PIN, always sent separately, are delivered to the right person. It requires banks to choose a responsible courier for the job, and also give proper instructions pertaining to delivery and subsequently ensure that these instructions are followed. Failure to do so may well result in banks ending up paying for any misuse of the card.

In this particular case, the complaint centred around Rs 25,000 debited from the account of a consumer. While the bank insisted that the amount had been withdrawn by the client from the bank's ATM using the debit card sent to him, the latter insisted that he had never received the card in the first place. When the bank refused to accept its responsibility for the loss of Rs 25,000 from the consumer's account, he filed a complaint with the banking Ombudsman. His allegation was that he never received the card, and enquiries from the bank had revealed that the card had been delivered to some security staff member in his office building without even checking his identification.

In response to the complaint, the bank submitted proof of the delivery, showing delivery of the card and the PIN at the mailing address of the client, and argued that the card was delivered to a certain Narendra and the PIN to a Sumita.

Both the receipts bore the rubber stamp of the company where the person worked. The subsequent use of the card at the ATM proved that it was used by an authorised person and the bank was not responsible for any consequences in this regard. The Ombudsman held in the end that the bank could not escape responsibility by stating that the card and the PIN were delivered to the mailing address of the complainant—in this case to unauthorised persons. When mailing a card and PIN, the bank has to ensure these are delivered to the addressee in person or to his authorised representative.

So in this case the bank has to take responsibility for delivering the card and the PIN to unauthorised persons and for the consequent unauthorised use. The bank was, therefore, directed to pay Rs 25,000 to the complainant, along with interest that would accrue to a savings bank account. The bank was also asked to pay Rs 1,000 towards the expenses incurred by the client in following up the case with the bank and later the Ombudsman. The bank was free to pursue legal remedy to recover the amount from the courier, the Ombudsman said (The banking Ombudsman scheme, annual report 2007-2008, Customer Service Department, Reserve Bank of India).

There are altogether 15 banking Ombudsmen in the country and you can get the address of the Ombudsman in your region from your bank. In fact banks are supposed to display in their offices the addresses and the telephone numbers of the banking Ombudsmen to whom consumers can complain.