These companies, represented by the industry body Internet and Mobile Association of India (IAMAI), have blamed the Telecom Regulatory Authority of India (Trai) for not heeding to companies’ complaints of fraudsters duping users via fake SMS headers and phishing calls.
In a writ intervention submitted in the Delhi High Court, IAMAI said that these companies have suffered “considerable damage” to their brand reputations and public trust, due to lax implementation of regulations by telecom industry participants.
“Like the Petitioners (Paytm), the Applicant’s members, who are Payment System Operators (“PSOs”), have also suffered considerable damage to their reputation, good will and the public’s trust in them due to the proliferation of unsolicited and fraudulent commercial communication over phone calls and SMS,” IAMAI said in the document filed on September 18.
The application was submitted in the ongoing lawsuit between Trai and Paytm’s parent One97 Communications in the Delhi High Court, which had its fifth hearing on Tuesday.
ET has a copy of the intervention application which is yet to be okayed by the Chief Justice for IAMAI to become party to the case. Email sent to IAMAI for comments didn’t elicit a response.
Interestingly, the intervention comes days after Paytm CEO Vijay Shekhar Sharma accused industry bodies including IAMAI and NASSCOM of being “silent” against alleged arm twisting of Indian startups by American technology companies.
IAMAI represents some 90 wallet and digital payments companies including the companies mentioned above. In the cited application, IAMAI shared numerous instances where payment companies and its customers suffered due to alleged negligence by telcos.
For instance, according to one such instance, PhonePe customers received SMS from fake header ‘AX-PHONEPE‘ instead of legitimate ‘AX-PHONPE’, claiming that their account has expired or blocked, or KYC verification is due etc to transfer user’s money. Others including Eko India, Paypoint, Pay1, and Infibeam Avenues have encountered phishing calls via illegitimate SIM cards.
The body alleged that despite making several complaints, payment companies have neither received any response from Trai nor heard of any action taken by the authority.
The court, in Tuesday’s hearing, pulled up Trai for its inaction and directed the regulator to submit in writing – within eight weeks – what action, if any, has been taken against telecom companies.
It also said that Trai must specify a “universe” of legitimate SMS headers for comparison because a gradual increase in registration of such headers does not mean progress in successful implementation of the blockchain. As of September 20, total 97,085 principal entities and 162,663 headers were onboarded, against 900,000 headers under the previous regime, Trai showed.
The next hearing is scheduled for November 25.
Paytm, in May, dragged Trai and telcos to the court for not blocking the flow of unsolicited traffic over their networks and sought damages of Rs 100 crores. In separate responses, Jio, Airtel and Vi have said that service providers cannot, legally, access or control the content of communications sent over their networks and judge whether it is fraud.
They also said that Paytm is trying to shift the blame of its own lapses to evade legal liability of financial frauds occurring through its app.
Meanwhile payments industry executives told ET that the matter is a serious one for the entire ecosystem, and not just for Paytm, as increased instances of frauds is causing reputational risks.
“This is no longer restrained to Paytm and is now an ecosystem concern,” a Paytm spokesperson said when ET reached out for comments. “We want to do what is right for our customers. We will continue fighting the right fight.”
Ketan Doshi, the CEO of Paypoint, said that lack of redressal framework and ecosystem collaboration is leading to a surge in phishing and social engineering attacks. “As an industry we have to band together to solve this menace,” he added.