New Delhi, Aug 1 - A call for immediate reparation to cyber fraud victims by financial entities has been made by the Parliamentary Committee on Finance, chaired by BJP MP Jayant Sinha. This measure is seen as a reinforcement of their commitment to consumer protection and is expected to drive these organisations to reinforce their security infrastructure.
"Automatic Compensation Mechanism Proposed by RBI"
The committee emphasises the implementation of an "automatic compensation system", an idea put forward by the Reserve Bank of India (RBI). The system places the onus of immediate compensation to the distressed consumer squarely on the financial institution, with subsequent investigation and tracing of funds to follow, as outlined in the committee's report.
This report was made available to the public in the Lok Sabha last week.
"Consumer Redressal - Need for an Extension"
In an interaction with PTI, Sinha stated:
"Our proposal is that on filing a complaint regarding cyber fraud victimhood, consumers should be automatically reimbursed into their accounts, within a specified limit. The responsibility of tracing the crime and culprits should be borne by the financial institutions, thus enabling instant justice for consumers."
The current requirement for victims to report the crime within three days should be extended to a week, Sinha suggested, a recommendation echoing other regulatory announcements by Indian government institutions.
"Following in the Footsteps of SEBI"
The committee, mirroring the protective actions taken by other governmental institutions like the Securities and Exchange Board of India (SEBI), has highlighted various facets of addressing cybercrime. The main emphasis is on a robust mechanism for consumer grievance redressal.
"This move will significantly illustrate their commitment to consumer protection, thereby boosting consumer confidence in the financial system. Additionally, this will prompt financial institutions to strengthen their security systems and implement effective fraud prevention strategies," the report noted.
Such strategies, the committee believes, will help insulate customers from rapidly emerging cyber threats and equip them with necessary financial safeguards.
"SMS Alerts - A Necessity, Not a Luxury"
The committee's report also noted a significant inconsistency where customers don't always receive SMS alerts for their account transactions.
This informational gap can facilitate potential crimes and fraudulent activities to go unnoticed. To address this, the committee strongly advised that financial institutions and service providers establish and implement comprehensive SMS notification systems. This move echoes the Telecom Regulatory Authority of India's (TRAI) endeavours to enhance transparency and improve information dissemination.
"These systems should facilitate prompt SMS notifications," the report added.
