Reliance Jio Slams Paytm For Dragging Telecom Companies To Court

Reliance Jio Infocomm has slammed Paytm for dragging access providers to court over phishing attacks on its users and alleged that the payments company is trying to shift the blame of its own lapses to evade legal liability of financial frauds occurring through its app.

In a counter-affidavit to a petition filed by Paytm in the Delhi High Court, India’s largest telco said mobile phone companies cannot be held liable for “unlawful activity” occurring over calls and messages as per the telecom regulator’s Telecom Commercial Communication Customer Preference Regulation (TCCCPR), 2018, aimed at checking pesky calls and messages.

“Under Section 79 of the IT Act, intermediaries are exempt from liability under the Act in respect of any third-party information, data, or communication link made available or hosted by them,” Jio added.

Paytm’s parent One97 Communications has moved the High Court against telecom operators Vodafone Idea, Jio, Bharti Airtel, Mahanagar Telephone Nigam (MTNL) and Bharat Sanchar Nigam (BSNL) besides Telecom Regulatory Authority of India (Trai) and the Communications ministry, blaming the telcos for not blocking those who are defrauding its customers by phishing activities over various mobile networks. It has also sought damages of Rs 100 crore for the failure of carriers which has "caused financial and reputational loss" to it.

The next hearing of the case is listed for June 24.

Jio, in its counter, said even Trai “is not empowered to itself act on fraudulent/unlawful activity, nor can it impose any legal obligation in this regard on service providers”.

It argued that the onus of preventing financial frauds lies on banks and wallet companies such as Paytm as per the Reserve Bank of India’s (RBI) mandate, which requires them to “prevent, detect and restrict occurrence of fraudulent transactions including loading/reloading funds into the PPI.”

The telco recalled two prior occasions (in June 2018 and December 2018) when the banking regulator temporarily suspended new customer registrations by Paytm on non-compliance with KYC norms for banking entities. It also alleged that RBI has not been made party to Paytm’s petition as it would lay bare the non-compliance of the payments app.

Jio alleged that Paytm is deliberately overlooking the fact that phishing scams are carried out through numerous avenues, including emails, websites, OTT channels and mobile apps, including the Paytm app.

Explaining the modus operandi of the fraudsters, Paytm had said such people or entities get registered with the telecom companies and get assigned themselves headers like Paytm, PYTM, PTM, IPAYTN, PYTKYC and its derivatives, which are similar to official headers of Paytm – including BPaytm, FPaytm, PAYTMB, Ipaytm and mPaytm.

Jio responded that the operators did not implement strict blocking of traffic until May 31, 2020, as telemarketers were still onboarding the new and complex blockchain registry designed to monitor unsolicited commercial communication (UCC). In fact, Paytm itself registered in end-March/April 2020, i.e. shortly before filing this lawsuit.

The telco also claimed that the single header against which Paytm had complained was blocked within one week.

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