Indian telecom operators like Bharti Airtel, Reliance Jio, Vodafone Idea and BSNL were penalized by the sector regulator for not preventing phishing attacks via short messaging service or SMS which cybercriminals used to dupe digital payment users in the country.
The decision could be seen as a victory for Paytm and other digital payment companies that were involved in a legal battle with Indian telecom service providers over the phishing issue.
Paytm and Walmart-backed PhonePe had earlier this year criticized telcos and the telecom regulator for failing to stop spam or fraud SMSes from unregistered telemarketers despite a new regulation meant to curb them. Paytm had also sought damages of Rs 100 crore ($13.51 million) from telcos.
Paytm, through its parent company One97 Communications Ltd, filed a rejoinder in the court alleging that Indian telcos were blocking “phishing” activities over their networks. It had then said that telcos were not monitoring the issuance of SMS headers to telemarketers, allowing fraudsters to manipulate customers by sending messages that appeared genuine.
Fake SMS headers are typically disguised as coming from payment companies and banks to secure private details from customers to gain access to their bank accounts.
Paytm, in its plea, said phishing activities “caused financial and reputational loss” to the company.
The Telecom Regulatory Authority of India (TRAI) informed the Delhi High Court that it imposed penalties on various telecom operators. The regulator said that these players violated the Telecom Commercial Communication Customer Preference Regulation.
The regulator said that it had issued show cause notices to all telecom companies for failure to meet benchmarks and curb unsolicited commercial communications (UCC).
“…after completion of due process, the financial disincentives were imposed on them,” the regulator said, adding that it has taken action against unregistered telemarketers as per the monthly performance monitoring reports submitted by telcos.
According to the performance monitoring reports, telecom operators imposed usage caps in more than 1.9 lakh cases during investigation of complaints and thereafter, warning notices were issued in 1.15 lakh cases, usage caps were imposed in around 77,000 cases and 17,000 connections were disconnected.
As per TRAI’s submission to the court, BSNL attracted the highest penalty of Rs 30.1 crore ($4.07 million). The regulator said that the state-run telco failed to respond to its show-cause notices and produce performance-monitoring reports.
Vodafone Idea, Quadrant Teleservice and Bharti Airtel attracted penalties of Rs 1.82 crore ($0.25 million), Rs 1.41 crore ($0.19 million) and Rs 1.33 crore ($0.18 million), respectively. The regulator also penalized videocon, Tata Teleservices and state-run Mahanagar Telephone Nigam Ltd (MTNL).
The regulator said that Vodafone Idea, Airtel, BSNL and Mukesh Ambani’s Reliance Jio misreported the count of unsolicited calls and messages on their networks.
“The telecom companies will definitely dispute this fine in the court, but I don’t expect any positive outcome because the regulator has done its independent investigation, so Paytm seems to have an upper hand clearly,” a high court lawyer was quoted as saying by local media.
Telecom operators in India are now using a blockchain-based system prescribed by the regulator to curb pesky telemarketing calls. Telcos have been asked to submit their SMS headers and content on this blockchain-based platform.