Disputed digital transactions

Will Ombudsman Scheme for digital transactions prove successful in resolution of complaints
Disputed digital transactions
Representational pic

Resolution of customer complaints in an era of digitalecosystem where volume of electronic transactions is witnessing unprecedentedrise, is a challenging task for the service providers (banks and financialinstitutions). Digital payment channels like mobile banking, e-banking, credit& debit cards, point of sale machines, electronic funds transfer throughNational Electronic Fund Transfer (NEFT) & Real Time Gross Settlement(RTGS) etc. are fast becoming preferred mode of payment transactions.

This has considerably reduced human error in electronictransactions. But at the same time, whole financial system has got exposed toborderless digital frauds. Precisely, if technology has revolutionizedfinancial transactions, it has at the same time given rise to a new breed offraudsters who misuse the same technology to steal identity as well as funds ofpeople.

This scenario has led to disputes between thebanks/financial institutions and the customers. Even as the banks and financialinstitutions have data security measures in place, the online fraudsters remainbusy to innovate their strategy to steal identity as well as funds from theaccounts of their customers.

The customer complaints in this regard are mounting eachpassing day. Since customers want quick resolution of their complaints, anydelay on part of the bank leaves them aggrieved. In absence of quick and robustmechanism of resolution of complaints, they are fearful to use online channelsfor making financial transactions.

To mitigate the sufferings and infuse confidence among theaggrieved customers, the Reserve Bank of India (RBI) has introduced Ombudsmanscheme for digital transactions. It's a dedicated apex level authority toexpedite the process of complaint resolution. Now complaints like unauthorisedelectronic funds transfer, customer's inability to transfer the funds to bankaccount, not loading funds into the wallet within a reasonable period of time,failure to effect online payment or fund transfer, failure to refund your moneyin case of a failed transaction, and not implementing stop-payment instructionswithin the specified time-frame can be filed with the Ombudsman for resolution.

Reaching to Ombudsman with any disputed digital transactionin your account, you have to first file your complaint with the concernedbank/financial institution. In case of no or unsatisfactory response from theservice provider, you can approach to the ombudsman within one year from thedate of rejection of your complaint. Notably, Ombudsman offices are situated in21 locations across 19 cities. You have to file your complaint to the ombudsmanunder whose jurisdiction the banks/ FIs office is located. The complaints canalso be filed online. You can seek address and email details of the Ombudsmanfrom your service provider (bank/FI) or can access the RBI websitewww.rbi.org.in to obtain the details.

The scheme exclusively for digital transaction also makes itmandatory for the complainant to submit proper records and documentary proofsso that claim for compensation is entertained by the ombudsman. The ombudsmanwill give a hearing to the complainant as well as the service provider inquestion. If resolution through settlement, conciliation and mediation fails,the ombudsman will pass an award, which can be a compensation up to Rs 20 lakh. Besides, the Ombudsman can alsoaward a compensation of Rs 1 lakh in lieu of loss of customer's time, expensesincurred and mental agony.

If either the complainant or the service provider (Bank/FI)is not satisfied with the ombudsman's decision, they can approach the deputygovernor in charge of the RBI department implementing this scheme. If thedispute still persists, they can approach the consumer forums or the courts fora final resolution.

Now the main question is about the success of this scheme.We have already Banking Ombudsman scheme in place. The performance of thescheme has not been encouraging. Even as awards were passed, the serviceproviders most of the time challenged it and allowed the dispute to remainunsettled. The Ombudsman scheme for resolving disputed digital transactions hassame mechanism – it can pass an award, but implementation will not be forceful.Service providers will continue to challenge the award. Resultantly, it wouldadd more to the agony of customers. The only solution is to give a proper legalsupport to the awards of the Ombudsman and don't leave the final resolution toconsumer forums and courts. Otherwise the scheme would prove useless.

Lastly, why can't banks/FIs have a robust, more flexible andautomated settlement and dispute management system?

(The views are of the author and not that of the institutionhe works for)


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