Karnataka High Court says telecom service providers (TSPs) are civilly liable for financial losses from SIM swap frauds tied to their negligence. TSPs now seen as security gatekeepers,like vault keepers in banks, tasked with stopping unauthorized access.
Justice Suraj Govindaraj ruled in case involving Basaveshwara Pattana Sahakara Bank Niyamitha (BPSBN),a cooperative bank in Shiralkoppa. Bank lost ₹50.5 lakh after BSNL official issued duplicate SIM without consent. Court dismissed BSNL's challenge to Lok Adalat ruling of ₹5 lakh compensation,raising it to ₹55 lakh . Stressed BSNL's duty to ensure no duplicate SIM issued without verified consent.
India's digital economy booming, UPI handling over thousand crore transactions monthly. Security of these relies on mobile number for OTP authentication. Court noted, “If this fails in SIM swap fraud, security bypassed instantly.”
Verifying subscriber identity before issuing duplicate SIM isn't just bureaucratic but crucial,court emphasized. “Every telecom service provider must treat every request for a duplicate SIM card with gravity it deserves,” court asserted .
Fraudulent transfers hit BPSBN's account February 6-7,2019. Bank said unknowns got duplicate SIM linked to its number from BSNL in Bengaluru,accessed OTPs,made unauthorized transactions. Central claim: BSNL issued duplicate SIM without proper verification.
BSNL argued fraud stemmed from complex criminal acts,impersonation, internal lapses at BPSBN. Said liability shouldn't cover third-party fraud,SIM issuance statutory telecom function. Claimed OTP access alone not enough for transactions; bank's credentials stayed confidential.
But court rejected BSNL's claim case was purely criminal. Affirmed civil liability can coexist with criminal proceedings,held BSNL liable for its officials' negligence. Cheating,impersonation allegations don't negate civil dispute when financial loss compensation is sought.
In end,court urged banks to proactively protect themselves and customers from SIM swap fraud risks. Will this reshape telecom providers' responsibilities…?
