Peers back Paytm in fight against telcos, Trai over financial frauds

New Delhi | Mumbai: Homegrown digital payments providers, including PhonePe and Mobikwik, have sought to join Paytm in a legal battle against the telecom regulator and mobile service providers over financial frauds where customers are targeted through calls and SMSes.
These companies, through industry body Internet and Mobile Association of India (IAMAI), have submitted a writ intervention appeal in the Delhi High Court to become party in a case by Paytm’s parent One97 Communications against the Telecom Regulatory Authority of India (Trai) and telcos including Reliance Jio, Bharti Airtel and Vodafone Idea (Vi) for failing to provide adequate safeguards to curb frauds.

IAMAI blamed Trai for not heeding their complaints of fraudsters duping users via fake SMS headers and phishing calls. It said digital wallet providers have suffered “considerable damage” to their brand reputations and public trust due to lax implementation of regulations by telecom industry participants.

The chief justice is yet to give his nod to IAMAI’s plea to become party to the case that had its fifth hearing on Tuesday.

“Like the petitioners (Paytm), the applicant’s members, who are payment system operators (PSOs), have also suffered considerable damage to their reputation, goodwill 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. ET has seen a copy of the intervention application.

An email sent to IAMAI for comments didn’t elicit a response as of press time Tuesday.

The association’s intervention plea 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.

The next hearing is scheduled for November 25.

IAMAI represents some 90 wallet and digital payments companies. In the cited application, IAMAI shared numerous instances where payment companies and its customers suffered due to alleged negligence by telcos.

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.

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.