Islamabad, August 4, 2023 – President Dr. Arif Alvi has taken a significant step to protect banking customers and combat online fraud in Pakistan.
While adjudicating a representation filed by United Bank Ltd (UBL) against a decision by the Banking Mohtasib Pakistan (BMP), the President has directed UBL to refund a defrauded amount of Rs 79,500 to Abdul Rauf, the complainant, along with the profit, within 30 days.
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The incident in question involved fraudulent debiting of Abdul Rauf’s account through the Inter-Bank Funds Transfer (IBFT) facility. The complainant had received a call from someone posing as a bank representative, who cunningly extracted his banking details and credentials. Subsequently, unauthorized transactions amounting to Rs 79,500 were carried out through IBFT, even though Abdul Rauf had never activated the Internet Banking Facility.
During the hearing at Aiwan-e-Sadr, the President examined the case thoroughly and listened to both the complainant and UBL’s representative. UBL’s representative argued that the complainant should have safeguarded his personal credentials and that the bank could not be held responsible for the disputed transactions since the customer had shared his banking information with the fraudulent caller.
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However, President Dr. Arif Alvi pointed out that the bank had confused two distinct steps – obtaining customer consent for availing the IBFT facility and authenticating the customer before conducting a banking transaction. He observed that UBL had activated the IBFT facility without obtaining the customer’s consent or adequately informing him about the risks and benefits of the service, particularly since the complainant was not well-versed in digital banking.
In his decision, the President held UBL accountable for non-compliance with the State Bank of Pakistan’s (SBP) directives, which explicitly required obtaining customer consent for such facilities. He deemed UBL’s actions as maladministration and consequently rejected the bank’s representation.
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President Dr. Arif Alvi further urged banks, including UBL, to rectify the inherent flaws in their systems to prevent online fraud and fraudulent transactions. He emphasized the importance of educating customers about the potential risks and advantages of online funds transfer facilities before activating digital banking services.
Moreover, he directed the Banking Mohtasib Pakistan (BMP) to collaborate with SBP and other banks to inform customers, through a simple letter, of their right to approach BMP for relief in cases where their complaints about disputed transactions were rejected by the bank.
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This decision serves as a stern reminder to financial institutions to prioritize customer safety and transparency in their services. It sends a clear message that banks must comply with relevant rules and regulations set forth by the SBP to safeguard customers from falling victim to online fraud and unauthorized transactions.
