Banks asked to refund Rs 2.74 million to fraud victims

As part of his efforts to deliver justice to the victims of banking fraud, President Dr Arif Alvi Sunday asked Banking Mohtasib to take steps to refund Rs 2.74 million to those who fell victim to the online scams.

Chairman Alvi asked Banking Mohtasib to look into the issue of bank frauds with the State Bank of Pakistan (SBP) to issue basic standard operating procedures (SOPs) so that CNICs of proven frauds are blacklisted, be placed on the central negative list, apart from ensuring that no banking facility could be extended to them by the banking industry.

The president issued these directions while rejecting two separate statements submitted by two private banks asking them to pay Rs 1.9 million and Rs 0.744 million respectively to their customers who fell victim to online banking fraud at the hands of fraudsters, the President said Secretariat Press Wing in a statement.

According to the details, Qaiser Mehmood who maintained an account in a private bank received a call from a number that looked like the bank’s helpline and the caller advised him to activate the disabled digital banking app.

Mehmood activated his app and then Rs 2 million was transferred from his account through multiple transactions. Similarly, Brigadier General (ret) Muhammad Arif Shaikh received a call from fraudsters asking for his bank credentials to remove some technical glitches from his account.

Later, an amount of Rs 994,000 was transferred from his account through 19 transactions. They asked their respective banks to refund their money, but to no avail. Feeling aggrieved, they separately approached the Banking Ombudsman to get relief.

The Ombudsman asked the banks to return the lost amounts to customers. The banks then filed separate representations challenging the Ombudsman’s decisions to the President.

The chairman conducted a personal hearing of the cases and after hearing the parties and perusing the available records, decided the cases in favor of the complainants.

It observed that the banks were found non-compliant with the SBP directives on implementing monitoring systems to detect fraudulent transactions. He said multiple back-to-back transactions took place but were not alerted and allowed the money to pass through the system.

It noted that the banks also failed to prove the legitimacy of the transactions under Section 41 of the Payment System and Electronic Funds Transfer Act 2007.

The chairman said that the banks failed to submit any proof of compliance with the SBP directives despite being given ample opportunity and concluded that malpractice and mismanagement were proved on the part of the banks and that they were in a position to cover the financial loss of the complainants.

Therefore, Chairman Alvi rejected the representations of the private banks and asked them to pay Rs 1,998,500 and Rs 744,000 to the complainants.