Paytm vs Telcos: TRAI imposes penalty of Rs 36 crs as they failed to curb cyber criminals from issuing fake SMS

TRAI has imposed a penalty on Airtel, BSNL, Reliance Jio and Vodafone Idea. This is in regards to the case where they did not respond appropriately to a show-cause notice that TRAI issued. It was due to failure in block phishing activities on their networks. The other entity that snowballed into the case was Tat teleservices. In June, One97 (Paytm parent company) had moved the Delhi High Court against telcos, TRAI and the Centre for not blocking those who were defrauding its customers by phishing activities over mobile networks.

BSNL has been slapped with the highest fine of ₹30 crores, according to an affidavit filed by the Trai at the Delhi High Court. Almost 60-70% of the fraudulent messages and phishing attempts to customers have been on the BSNL network. “As per regulation 27 of Telecom Commercial Communications Customer Preference Regulations (TCCCPR), 2018; the Authority (Trai) may impose financial disincentives on any access provider if it fails to curb Unsolicited Commercial Communication (UCC) through its network," TRAI said in the affidavit filed on Monday.

BSNL attracted the highest penalty of Rs 30.1 crore followed by Vi, Quadrant and Airtel that attracted a penalty of Rs 1.82 crore, Rs 1.41 crore and Rs 1.33 crore respectively.

Can TRAI impose the penalty directly?

When Paytm in June, filed the case, Delhi High Court directed TRAI to take action against entities and persons; those who were not complying with its regulations to curb the problem of unsolicited commercial communications. However, TRAI cannot impose a penalty on telecom operators without giving them sufficient time to block phishing activities on their networks. While BSNL was issued a show-cause notice twice to comply with the UCC guidelines other telcos were asked on 1 October. Failure to curb UCC by both BSNL and other telcos attracted the penalty. The Delhi High Court will hear the case on Wednesday.

In its first petition in June, Paytm filed a defamation suit of ₹100 crores on telecom operators. This was for not blocking phishing activities over their networks, leading to financial loss for the fintech company. Then, in September, IAMAI and other digital fintech including PhonePe and MobiKwik filed a writ petition for the same.