Parliamentary Panel urges immediate compensation for cyber fraud victims by Financial Institutions

A parliamentary panel has called for immediate compensation to cyber fraud victims by financial institutions, saying this will go a long way in demonstrating steadfast commitment to consumer protection and will push these firm to bolster their security measures.

New Delhi: A parliamentary panel has called for immediate compensation to cyber fraud victims by financial institutions, saying this will go a long way in demonstrating steadfast commitment to consumer protection and will push these firm to bolster their security measures.

The committee strongly believes that there should be an “automatic compensation system as devised by the RBI and it should be the financial institution’s sole responsibility to immediately compensate the hapless customer, pending further investigation and final traceability of funds”, the Standing Committee on Finance headed by BJP MP Jayant Sinha has recommended in its report.

---

The report was tabled in Lok Sabha last week.

Speaking to PTI, Sinha said, “What we have suggested is if the consumer files a complaint that they have been the victim of cyber crime fraud, then they should automatically get the money back into their accounts. Up to a certain limit of course. The onus should be on the financial institutions to chase down the crime and perpetrators so that consumers get immediate justice.” Noting that fraud victims are supposed to report the crime within three days, he said the committee believes that it should be extended to seven days.

The panel, he said, has stressed four or five different dimensions for addressing cyber crime and one of the most important aspects relates to the consumer grievance and redressal mechanism.

This proactive approach aligns with the principle of safeguarding customer interests and ensuring rapid resolution in cases of cyber crime in the financial sector, the report has said in its recommendations.

“This would go a long way in demonstrating a steadfast commitment to consumer protection, which in turn strengthens their confidence in the financial system. Furthermore, this will propel financial institutions to bolster their security measures and adopt robust fraud prevention strategies,” it said.

“The committee strongly believe that this will ensure that customers are shielded from the constantly evolving cyber threats and are provided with the necessary safeguards for their financial wellbeing,” it added.

It also observed a “serious anomaly” as customers are not necessarily receiving SMS notifications when amounts are credited to or debited from their accounts.

“This lack of information leaves room for potential crimes and fraudulent activities to go unnoticed. To address this critical issue, it is strongly recommended that financial institutions and service providers establish and implement robust SMS notification systems. These systems should promptly send SMS notifications,” it said.