How to File a Complaint Against Prepaid Payment Instruments (PPI)? By Saswati Soumya - April 8, 2019 Last Updated at: Jul 25, 2020 2742 How to file a complaint regarding PPI It was announced on 3 June 2020 that Prepaid Payment Instruments (PPIs) will be subject to enhanced regulatory supervision. Supervision processes will include central banks’ off-site surveillance, tracking scams, data localization and enhanced reporting standards for data breaches. This is one of many other guidelines published by the Central Bank every now and then. The last decade witnessed a surge in financial transactions in the digital medium in India. The Government felt the need to strengthen consumer confidence by provisioning for a dedicated, cost-free and expeditious grievance redressal mechanism, and thus implemented the Ombudsman Scheme for Digital Transactions, 2019 (“Scheme”). What is this Scheme all about? The Reserve Bank of India (“RBI”) directed the system participants, as defined in the Scheme (“System Participant”), to introduce the mechanism of ombudsman vide a notification dated January 31, 2019. As per this Scheme, a System Participant refers to any person, other than a bank participating in a payment system as defined under the Payment and Settlement Systems Act, 2007 (“PSS Act”). However, a System Participant does not include a system provider. As per the provisions of the PSS Act, a system provider means and includes a person who operates an authorised payment system (“System Provider”). The primary aim of this Scheme is to provide a complaint redressal mechanism for consumers who use electronic payment systems for digital transactions. It is to be noted that, this Scheme is applicable to those digital transactions which are conducted through non-bank entities regulated by RBI. There is a separate scheme addressing the complaints relating to digital transactions conducted through banks. What are the grounds on which a consumer can file a complaint with the ombudsman, especially relating to Prepaid Payment Instruments (“PPI”)? To give some background, let us understand what is PPI? PPIs are instruments that facilitate the purchase of goods and services, including financial services, remittance facilities, etc., against the value stored on such instruments. There are three types of PPIs, namely: (i) Closed-system PPI; (ii) Semi-closed system PPI, and (iii) Open system PPI. As per the Scheme, the consumer can file a complaint with the Ombudsman when he/she is of the view that, a System Participant has not adhered to RBI’s instructions on the usage of semi-closed system PPIs. A few of the instances, wherein the consumer can file a complaint are as follows: If the System Participant fails to load funds in the consumer’s wallets/cards in a reasonable time; If there has been an unauthorized electronic fund transfer from the consumer’s account; If the System Participant has not transferred/refused to transfer/failed to transfer the PPI’s balance amount to the consumer’s own bank account or back to the source account during the closure, the expiry of validity period etc of the concerned PPI within a reasonable time. If the System Participant fails to refund/ refuses to refund the amount to the consumer’s account in case of unsuccessful/cancelled transactions; If the System Participant does not credit/delays in crediting the account of PPI holder as per the terms and conditions of the promotional offers from time to time. It is to be noted that, this Scheme also covers the grounds on a which a complaint may be filed, if a System Participant does not adhere to RBI’s / respective System Provider’s instructions regarding payment transactions through Unified Payments Interface (“UPI”) / Bharat Bill Payment System (“BPPS”) / Bharat QR Code / UPI QR Code. Talk to Our Legal Experts How will a consumer file a complaint? As per the Scheme, one may file a complaint with the ombudsman for digital transactions (“Ombudsman”) on the aforesaid illustrative grounds, within whose jurisdiction the branch or office of the System Participant, against whom the complaint is filed, is located. The aggrieved can either make a complaint all by himself/herself or through his / her authorised representative. Such authorized representative can be anyone, but an advocate. The Ombudsman is a senior official appointed by the RBI. As on date, 21 Ombudsman has been appointed, and their offices are located mostly in state capitals. The addresses and contact details of the offices of the Ombudsman are provided under Annex I of this Scheme. In addition, the aggrieved may also file a complaint through electronic means. What are the prerequisites for filing a complaint with the ombudsman for digital transactions (“Ombudsman”)? The complainant should keep the following things in mind before approaching the Ombudsman, namely: The complainant had first complained to the concerned System Participant, but the System Participant had rejected it; The complainant had not received any response from the System Participant for 1 month after the System Participant had received his / her representation; The complainant is dissatisfied with the System Participant’s response; In terms of timeline, the complainant has to approach the Ombudsman within 12 months after he/she has received the System Participant’s response to his/her representation or, within 13 months after he/she had made written representation to the System Participant but had not received any response; The subject matter of the complaint should not have been brought before the Ombudsman either by the complainant or by any of the concerned parties on the same subject matter; The subject matter of the complaint should not have been decided by / pending with any forum/court/ arbitrator; The complaint should not fall under the disputes covered under Section 24 of the PSS Act, i.e., for eg. disputes between System Participants regarding the issue of the operation of the payment system; The complaint should not pertain to disputes arising from a transaction between customers. 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