Direct Paytm to pay damages to doctor who lost Rs 3 lakh to hackers, HC tells RBI

CHENNAI: The Madras high court has ordered the RBI to ask Paytm to compensate a doctor who lost Rs 3 lakh to hackers through the digital payment portal, issuing the directive while deprecating the tendency of one institution after another kicking the can down the road when bilked customers seek redress.
"Even though the public is encouraged to use Paytm, Google Pay, Amazon Pay, etc., the customer is made to run from pillar to post in case they are affected due to any third-party violations or fraudulent intervention," the court said.
The order was issued to the RBI as Paytm is a private entity and such a directive cannot be issued to it under a writ petition. The HC made it clear that the portal is liable to protect its customers.
"What is surprising is that even when the RBI has issued master directions for both banks and prepaid payment instruments, every institution shifts the blame upon the other and no one has come up with a concrete idea as to who has to bear the loss suffered by the petitioner, for none of her mistakes," the HC said, referring to the doctor, R Pavithra.
Pavithra's banker, City Union Bank, argued the money was stolen from her Paytm account and the bank cannot be held responsible. Paytm claimed transactions on the platform are "very secure" and do not go through without the customer's knowledge or sharing of account details.
The RBI pointed out that "it does not interfere" in transactions between regulated entities and their customers.
The HC expressed displeasure that all the institutions were passing the buck. It stressed that the petitioner must not suffer while pointing out that she had promptly complained to her bank which, in turn, had sent it to Paytm.
"As per RBI circulars, Paytm had to establish within 90 days of the incident that the petitioner was liable for the loss. However, it failed to do so. Thus, as per RBI guidelines, the amount was to be repaid to the customer irrespective of whether negligence was on her part or not," the HC said.