Islamabad, July 12, 2023 – President Dr. Arif Alvi has dismissed an appeal by Bank Alfalah against the decision of the Banking Ombudsman, directing the bank to issue a refund to a customer and send him an apology.
The dispute arose when the bank enabled online transactions on the customer’s credit card without his consent and failed to address his timely complaint regarding a disputed transaction.
READ MORE: Pakistan Advises Financial Institutions to Refrain from Processing Cryptocurrencies
President Alvi emphasized that when a bank provides internet banking facilities to its customers, it is essential for the bank to educate them about the advantages and potential risks involved. In line with this, he directed Bank Alfalah to refund the customer’s lost amount of Rs 66,850, along with the corresponding profit.
The President’s decision was made following a case brought forth by Muhammad Yar, the complainant, who filed a complaint with the Banking Mohtasib. Yar stated that an unauthorized transaction amounting to Rs. 66,850 occurred on his Bank Alfalah credit card when it was used for a transaction with Noon-e-Commerce solution. He promptly informed the bank about the incident and requested that the online transaction be halted. Although the bank initially reversed the transaction, it deducted the amount from his credit card after six months, leaving him aggrieved.
READ MORE: Remittances Plunge by Approximately 14% in 2022-23, Reveals State Bank of Pakistan
The Banking Mohtasib, upon reviewing the case, directed Bank Alfalah to refund the lost amount. Dissatisfied with this decision, the bank filed a representation with the President, who conducted a personal hearing and ultimately rejected the bank’s representation.
President Alvi noted that the complainant lacked familiarity with internet and digital banking and only became aware of the transaction when he received a call from the bank’s real-time Monitoring Unit. During the call, the customer confirmed that he had not authorized the disputed transaction.
READ MORE: SBP Introduces Commemorative Rs75 Banknote to Celebrate Founding Anniversary
The President further pointed out that Bank Alfalah failed in its duty to promptly report the unauthorized transaction and waited for a formal complaint. He also highlighted the bank’s failure to submit the required SMS or email evidence of the One-Time Password (OTP) delivery to the customer, indicating potential record-keeping deficiencies.
Additionally, President Alvi highlighted Bank Alfalah’s non-compliance with various regulations and directions issued by the State Bank of Pakistan. These regulations require the bank to fully inform customers about electronic funds transfer facilities in plain language and obtain their consent before enabling such services.
READ MORE: Meezan Bank Receives Reaffirmed AAA/A-1+ Entity Ratings
Consequently, the President concluded that Bank Alfalah had not successfully refuted the complainant’s claims or the findings of the Banking Mohtasib. The bank failed to fulfill its legal obligations and prove that the internet banking facility had been activated with the complainant’s consent. Thus, the President deemed the bank’s representation devoid of merit and ordered Bank Alfalah to issue an apology to the customer and refund the lost amount, along with any corresponding profit.
