Debit cards have become an essential part of everyday life, making it easy to pay for groceries, withdraw cash, shop online, and even access airport lounges. Imagine, though, reaching a payment counter or an ATM during your travels only to discover that your debit card has been blocked by your bank without any prior notice.
Your actual bank balance remains safe in your account, but such an unexpected disruption can leave you stranded, causing travel hardship and distress. That is exactly what happened to a Federal Bank customer.
The bank blocked his card without any intimation, leaving him and his family stuck at Kuwait International Airport despite having sufficient funds in their account.
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What happened in this case?
The customer had maintained an account with Federal Bank since 2015. He was using an international debit card while travelling from Kuwait to Kochi on September 2, 2021, The Times Of India reported.
When he tried to access an airport lounge at Kuwait International Airport, the card failed. Further attempts to use the card at airport shops were also declined. Upon reaching Kochi, the problem continued and the card was displayed as invalid at a duty-free shop and then at an ATM.
The customer later discovered that the bank had blocked his debit card and issued a replacement card without informing him. He further alleged that the new card remained at the bank branch for months while he and his family had to suffer during their international trip.
He then approached the Ernakulam District Consumer Disputes Redressal Commission in Kerala alleging that the bank had blocked his debit card without any prior notice.
In its July 14 order, the commission held the bank liable for deficiency in service and unfair trade practice by blocking the customer's international debit card without ensuring that he was informed.
The commission directed Federal Bank to pay Rs 1.25 lakh in compensation and litigation costs, saying that although banks can block cards to prevent fraud, failing to inform customers beforehand amounts to deficiency in service, ToI reported.
Why Did The Bank Argue?
Federal Bank argued the card had been blocked after receiving an alert from Mastercard regarding a possible data compromise involving the customer's card. As a precaution, it blocked the card and issued a replacement.
The bank also said it had attempted to inform the customer through an SMS, but the message could not be delivered because of a technical reason.
What Did The Commission Order?
The Ernakulam District Consumer Disputes Redressal Commission found the explanation unconvincing. It noted inconsistencies in the bank records when the Mastercard alert was received and when the replacement card was issued.
The commission observed that while anti-fraud blocks are legal, failing to notify the customer beforehand is an unfair trade practice and a service deficiency.
Hence, it ordered the bank to pay Rs 1 lakh for the mental agony, hardship and trauma suffered by the customer and his family and Rs 25,000 for litigation costs.
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The commission further mentioned that the bank must pay within 45 days, failing which the amount will add 9% annual interest until payment.
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