Author: Anisha Banka, National Law University Odisha
To the Point
The digital age we are living in now is continuously evolving enabling faster and broader outreach to the audience. Now, as we have advanced and much easier ways to do money transactions and mobile communications from the remotest parts of the world. But along with this comes the alarming increase in a new way of crimes i.e online frauds. Fraudulent calls in legal aspects called phishing or voice phishing. In this type of crime attackers trick individuals through calls into revealing their personal credentials by posing as legitimate entities often from banks or telemarketers. To make us aware of this rising threat, we do hear a voice while making calls, about such fraudulent calls. This article explores the existing legal framework that aids consumers against telemarketers and financial institutions, the two important stakeholders. They play a pivotal role in addressing and preventing the situation. By analysing the case laws, this article addresses the potential path towards the future of these crimes and legal remedy that a person can seek.
Legal Jargons
Unsolicited communication is marked as an unfair trade practice under section 2(28) and section 2(47) of Consumer Protection Act, 2019. Thus, allowing the central government to establish a legal mechanism to regulate the matters. The Telecom Regulatory Authority of India (TRAI) governs commercial communications through its Telecom Commercial Communications Customer Preference Regulations, 2018 (TCCCPR). It has issued several guidelines for managing telemarketers aimed at reducing Unsolicited commercial communications (UCC). Telemarketers must register with telecom operators, requiring physical verification, biometric authentication, and unique mobile number linking. Thus, one should lookout for a ‘Registered Telemarketer (RTM)’ for saver communications. Further, the promotion calls are restricted to the 140 series. Further with the NDRC registry one gets an option to opt out of promotional communications. Now, moving towards financial institutions, RBI provides certain guidelines to make them more accountable and protect consumers latest one that of 17 January 2025. They ought to provide zero liability protection. Further, the Regulated Entities shall develop Standard Operating Procedures (SOP) with the aim to enhance the monitoring of accounts linked to the revoked mobile numbers for preventing any use of linked accounts as Money mules. Use of standardized numbering series in order to detect fraudulent calls. In order to reduce the increasing rate, we need to first detect these calls.
The Proof
In the event of fraudulent calls, customers have to report the incident to their respective banks and the police. The attacker shall be charged for cheating by personation using computer resources under section 66D of the IT Act 2000. Further Section 318 of the BNS deals with the offence of cheating and dishonestly inducing the delivery of property. There is also a penalty for the non-obedience of the NDNC Registry. Yet with all the remedial mechanisms many people are falling into its trap as the attackers are intimidating entitled authorities or those AI generated calls look so real that it makes it difficult to identify. The major drawback is that AI voice cloning tools require only basic level of experience to use. Just three seconds of audio was enough to produce a clone with an 85% voice match to the original (based on the benchmarking and assessment of McAfee security researchers). Thus, a more secure database needs to be generated and people need to be made aware of such measures. Chakshu is a government scheme under the ministry of communications. Chakshu facilitates citizens to report the suspected fraud communications with the intention of defrauding telecom service users. Any complaint made within 3 days of receiving UCC / Spam are considered as valid complaints leading to further investigation by the telecom service providers which may lead to action against the sender.
Abstract
With the alarming increase in fraudulent calls/ AI generated calls in India, one needs to be aware of the remedies available and course of legal actions. 48% of the affected individuals report financial loss exceeding INR 50000/-. This article investigates the regulatory mechanism of telemarketers and redressal mechanism provided by banks for recovery of financial loss with relevant case laws, drawing from Relevant statutory laws. The Zero Liability Policy introduced by RBI through its circular dated July 6, 2017, a landmark cornerstone which outlines the circumstances where the customer bears no financial liability on the occurrence of unauthorized transactions provided there is no negligence on the part of the customer. This enhances accountability from financial institutions towards the customers providing a more accountable and responsible financial space.
Case Laws
State bank of India vs Pallabh Bhowmick & ors.
In this case a customer intended to return an online purchase got tricked by the fraudster impersonating the customer care executive of the store. Thus, leading to unauthorized money withdrawal. The Supreme Court held the bank liable for such unauthorized transactions especially when the customer reported it promptly. Aftermath, RBI issued its guidelines on preventing fraud.
Hare Ram Singh v. Reserve Bank of India & Ors.
Hare Ram Singh, a 55-year-old scholar got tricked for over INR 2.6 lakhs in unapproved transactions. Even though he informed the bank of the fraudulent transactions right away, nothing significant was done to get his money back or stop more losses. The bank asserted that the alleged fraud resulted from Mr. Singh’s negligence. The court noted that the bank was obliged to take immediate actions on the account in a timely manner and it was the bank to secure the client’s money. Thus, it was reinforced that banks cannot transfer the burden of systematic shortcomings without substantive evidence.
Conclusion
The gap lies in the regulatory vacuum between banks and telemarketers. There is no formal mechanism for banks and telecom services to have a shared blacklist in real time. Most of the time telecom networks fail to detect the suspicious call patterns which mimic legitimate banks and banks are not even aware of the misuse of their band unless complained. This regulatory disconnect creates confusion and erodes consumer trust. Customers, unsure whether a call is from their bank or a fraudster, often fall prey due to the seemingly legitimate tone and urgency of the communication. Thus, it necessitates a more comprehensible and connected framework to help the customers. Here, we can observe that what lacks is not the remedies provided or existing legal frameworks but a bridge between various operating systems which can curtail the menace of fraudulent calls. People need to be made aware about these calls as especially the old age group as they are the most vulnerable.
FAQS
What are the fraudulent calls?
Fraudulent calls in legal aspects are called phishing or voice phishing. In this type of crime attackers trick individuals through calls into revealing their personal credentials by posing as legitimate entities often from banks or telemarketers.
What are the usual suspected fraud communications related to?
Bank Account / Payment Wallet / SIM / Gas connection / Electricity connection / KYC update / expiry / deactivation, impersonation as Government official / relative, sextortion related etc.
What is the cyber-crime helpline number?
1903 or website https://www.cybercrime.gov.in
What is zero-Liability Policy?
The Zero Liability Policy introduced by RBI through its circular dated July 6, 2017, outlines the circumstances where the customer bears no financial liability on the occurrence of unauthorized transactions provided there is no negligence on the part of the customer.
What legal course a customer has against fraudulent telemarketing cells?
The attacker shall be charged for cheating by personation using computer resources under section 66D of the IT Act 2000. Further Section 318 of the BNS deals with the offence of cheating and dishonestly inducing the delivery of property. There is also a penalty for the non-obedience of the NDNC Registry.
