Consumer commission fines bank Rs 1 lakh for issuing insurance policies to cardholder without consent

Mumbai: The Mumbai Central District Consumer Disputes Redressal Commission has found American Express Banking Corporation (AEBC) guilty of substandard service and unfair trade practices. The panel ruled in favor of the petitioner, who was issued two insurance policies without his consent, ordering the bank to pay Rs 1 lakh as compensation for mental anguish and Rs 10,000 as legal costs.

According to a copy of the complaint, the complainant, Shakeel Sheikh, a resident of Colaba, alleged that AEBC facilitated the purchase of two insurance policies worth Rs 2 crore each with a premium of Rs 24,448 per policy, which were debited from his credit card without the complainant’s permission.

Complainant discovered unauthorized transactions on a credit card statement dated February 21, 2015 showing a total of 48,896 under the heading “miscellaneous purchases”.

When the complainant approached AEBC to explain the unauthorized transactions, the bank acknowledged the error and assured him that it would be corrected. However, the issue was not resolved and later the complainant received a notice to attend the National Lok Adalat on July 8, 2017 regarding the overdue amount of ₹1,23,576 on his credit card. This prompted the complainant to file a formal complaint with the commission.

After reviewing the complaint, the commission asked the firm to provide a response, but the firm did not provide any response, so the case was resolved ex-parte

The Commission, in its rulings, held that the policies were issued by the insurance company based on the AEBC’s request. The same was confirmed by the complainant’s credit card statement which showed that the premiums were paid without his consent.

Meanwhile, the insurance company also admitted that it had no direct interaction with the applicant regarding the policies, confirming that AEBC acted without authorization.

“The complainant has proven service deficiencies and unfair trade practices by AEBC. Issuing policies without consent is negligence and breach of trust,” the commission believes.