Debit Card: Debit card blocked at airport; court imposes heavy fine on bank

Legal News: Blocking a Kerala family's debit card without prior notice proved costly for Federal Bank, resulting in the bank having to pay ₹1.25 lakh in compensation to the family. Let’s look at the details of the case.

Debit Card: A consumer court in Kerala has held Federal Bank liable regarding its services. The case involves a customer whose international debit card was blocked by the bank without notification. Consequently, he was unable to access the lounge facilities at Kuwait Airport with his wife and children, despite having sufficient funds in his bank account.

What is the full story?

Paul, the complainant, has been an NRE customer of Federal Bank since 2015. The bank had issued him an international debit card valid until December 2023, which offered benefits such as free access to domestic and international airport lounges. He had been using this card since 2018. While returning to Kochi from Kuwait with his family, he attempted to use the card at the international lounge at Kuwait Airport, but the transaction failed; a "Card Failure" message appeared on the screen. As a result, Paul, his wife, and his children were denied entry to the lounge.

Paul stated that since he had sufficient funds in his account, he had not carried significant cash or alternative payment methods. The sudden failure of the card caused him and his family considerable distress and mental agony while abroad.

The bank's explanation

Regarding this matter, Federal Bank stated that it had received a security alert from Mastercard on August 10, 2021, indicating a potential compromise of the card's details. The bank maintained that blocking the card was necessary to protect the customer from fraud and claimed that the customer had been informed about this via SMS.

What did the Consumer Commission say?

The Commission observed that Paul had neither requested the issuance of a new card nor consented to the blocking of the old card before its expiry. The bank also failed to prove that the customer had been reliably informed about the blocking of the card and the issuance of a new one.

Consequently, the Commission ordered the bank to pay ₹1 lakh as compensation for mental agony, hardship, and stress, along with ₹25,000 towards litigation costs.