The digital payments industry hailed the order, as inadequate monitoring had allowed fraudsters to send fake messages under duplicate headers. SMS headers are unique IDs through which commercial text messages are sent.
A two-member bench of Chief Justice DN Patel and Justice Jyoti Singh, in response to a writ petition filed by Paytm, said lax implementation of the Telecom Commercial Communication Customer Preference Regulation, 2018 (TCCCPR) could lead to legal action.
Under TCCCPR, all business entities that send promotional and transactional SMSes must register their headers and content on a blockchain-based platform operated by telecom operators. This is aimed at preventing spam, including fraudulent messages delivered without user consent and registration.
The High Court did not, however, direct the respondents, including the telecom companies, to pay damages worth Rs 100 crore originally sought by Paytm for reputational loss on account of payment frauds due to a lack of adherence to the TCCCPR rules.
Online news portal Bar & Bench was the first to report the development.
A spokesperson for Paytm termed the order a “big victory”. The fintech player had filed a case against TRAI and telecom companies including Reliance Jio, Bharti Airtel and Vodafone Idea (Vi).
“The purpose of the petition was to protect the digital payments ecosystem and customers and we don’t feel the need to press for any further compensation. In case we see any delays in the implementation, we will come back and fight again in the court,” the spokesperson told The Economic Times.
Typically, fake headers and messages are disguised as coming from banks or payment executives to secure private details from unsuspecting customers in order to gain access to their bank accounts and siphon funds. Such frauds proliferated during the pandemic-induced lockdown in tandem with the rising number of first-time digital payment users.
In its writ petition filed last year, Noida-based Paytm contended that telecom operators had gone easy on the implementation of the new rule, allowing fraudsters to manipulate their customers by sending fake messages under duplicate headers. Peers such as PhonePe, CCAvenues and MobiKwik also mirrored the stance in an intervention plea by industry grouping Internand Mobile Association of India (IAMAI) in September.
In the previous hearing, Trai told the high court bench that it had already collectively fined Rs 35 crore from eight operators, including Bharti Airtel, Vi and Reliance Jio for allowing cybercriminals to issue fake SMSes to dupe digital payment users.
“Today’s decision by the Hon. Court will go a long way in safeguarding millions of Indians in the country who make digital payments and other online transactions,” said Satish Kumar Gupta, the CEO of Paytm Payments Bank. “We strongly believe that all of us including regulators, government and access providers have to come together to fight the menace of fraudulent calls and SMSs in the country.”
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