What Your Rights Are When Cyber Fraud Drains Your Bank Account

Fraudsters often trick bank customers into sharing one-time passwords or banking credentials by using fake messages about blocked debit cards. A legal case involving a retired teacher and the State Bank of India shows how this happens when a scammer exploits a real banking announcement to look genuine. In the case of Remadevi T.L. versus State Bank of India, a retired teacher received an SMS in July 2019 warning that her debit card would be blocked. A phone call followed, and she was tricked into sharing OTPs to register for a fake app. Within minutes, fraudsters made unauthorised transactions and took Rs 3.73 lakh from her account. The customer reported the fraud to SBI's customer care at 10.31 am, just 51 minutes after getting the first alert. A police investigation later found that the stolen money went into four Spice Digital wallets.

Liability Rules

Under Reserve Bank of India rules, customer liability for unauthorised transactions depends on who is at fault and when the incident is reported. Customers have zero liability if the fraud happens due to the bank's own mistake or weak security. For third-party breaches where neither the bank nor the customer is at fault, customers also get zero liability if they report the fraud to the bank within three working days. When a loss happens because of customer mistakes like sharing payment details, the customer bears the loss until they report it to the bank. Any money lost after reporting must be paid back by the bank. Legal experts point out that sharing an OTP does not automatically mean a customer is at fault, and banks must prove negligence with reliable material rather than make unsupported claims. Courts have also ruled that banks must investigate properly, initiate chargeback requests, and provide written explanations if they reject a claim.

Context

Cyber fraud often relies on panic and urgency to stop victims from verifying suspicious phone calls or text messages independently. The Reserve Bank of India sets clear guidelines to protect digital banking users, but recovering lost funds usually requires quick reporting to both the bank and law enforcement authorities.