Telcom firms not preventing phishing alleges Paytm; Delhi HC seeks response from TRAI and Centre

One97 Communications Ltd., (One97) which runs Paytm, has claimed that millions of its customers have been defrauded by phishing activities and the failure of telecom companies to check the same has caused financial and reputational loss to it.

One97 filed a plea in the Delhi High Court claiming that millions of its customers have been defrauded by the phishing activities over mobile networks of major telecom companies. Paytm has sought damages of Rs. 100 crore from telcos for alleged damage to its brand and loss of goodwill.

Paytm has alleged damage to its reputation due to “phishing” activities over mobile networks of major telecom companies. According to the allegations filed by One97, such mass fraud is a direct result of the telcos flouting much of the legislative framework regulating commercial communication over telecom networks, i.e. the Telecommunication Commercial Communication Customer Preference Regulations, 2018 (TCCCPR, 2018).

The plea has alleged that One97 had repeatedly attempted to seek redressal on behalf of its customers who have been defrauded of large sums of money. The plea stated that, however, telcos have failed to discharge their statutory obligation under the TCCCPR 2018 which was notified by the Telecom Regulatory Authority of India (TRAI) to curb problem of unsolicited commercial communications. According to the Petitioner (One97), the grievances of the customers of the petitioners and its associate companies/group companies have remain unaddressed. Moreover, the Petitioners have also suffered a loss in reputation as well as are being held liable by several customers for no fault of theirs.

Paytm, in its petition filed though advocate Karuna Nundy, contended that the telecom majors violated their obligations under the TCCCPR 2018 which was notified by the TRAI to curb problem of unsolicited commercial communications. Paytm has claimed that under the regulations, the telecom companies are required to verify purported telemarketers seeking registration (registered telemarketers or RTMs) with them before granting access to their customer data and also take action immediately against all fraudulent RTMs.

The plea contended that “Phishing here consists of fraudsters spamming the Petitioners’ customers by using telecom network architecture on a massive scale; through unsolicited commercial communications... they claim to be the Petitioners’ representatives, and induce the Petitioners’ customers to part with sensitive data that enables the fraudster to divert the customers’ funds to their own accounts.” Further the plea contended, “Under the statutory regime it is the responsibility ... and the exclusive ability of Telecommunications Service Providers to prevent such fraud and deter fraudsters through blocking and/ or financial disincentives.”

The Petitioners have also contended that the problem of unsolicited commercial communication has further been on the rise over the last few months after the onset of the Covid-19 pandemic. Resultantly, there has been a proportionate rise in the proliferation of fraudulent message headers deceptively similar to the header used by the Petitioners and its associate companies/related parties/ group companies, containing the words PTM & PYTM, IPAYTN, PYTKYC, BPaytm, FPaytm, PAYTMB, Ipaytm and mPaytm and in the reporting of such instances.

The plea has sought TCCCPR 2018 to be fully implemented so as to prevent the unsolicited & fraudulent commercial communication being sent over the networks of the telecom companies and further seeks telcos to take effective action under TCCCPR 2018, to block the phone numbers of UTMs (Urchin Tracking Modules) sending unsolicited commercial communication including through phone calls, to the Petitioners’ customers.

A bench of Chief Justice DN Patel and Justice Prateek Jalan of the Delhi High Court issued notice to the Ministry of Communication, Telecom Regulatory Authority of India (TRAI) and major mobile service providers, including Airtel, Reliance Jio, MTNL, BSNL and Vodafone seeking their stand on the plea before the next date of hearing on June 24.

Additional Solicitor General Maninder Acharya and central government standing counsel Anurag Ahluwalia accepted notice on behalf of the Ministry. Paytm has also claimed that certain TCCCPR provisions provide for action only against those telemarketers who make unsolicited communications in bulk and provide for only graded penalties. Paytm has therefore sought an order declaring such regulations as unconstitutional and ultra vires the TRAI Act. It has also sought a declaration from the court that under the regulations the telecom companies are obligated to put in place mechanisms to register reports of violations from customers.