How can consumers dispute unauthorized UPI merchant payments?

Unified Payments Interface (UPI) has made online transactions faster and more accessible, but it also poses risks, particularly in cases of unauthorized payments to merchants. Such payments may occur due to fraudulent activity, hacked accounts, or technical issues. Consumers need to understand how to dispute unauthorized UPI transactions and ensure that they are refunded and protected from future unauthorized deductions.

Steps to Dispute Unauthorized UPI Merchant Payments

• Verify the Transaction Details
  
  • Check the payment: Confirm whether the payment was actually made and to the correct merchant. Sometimes, consumers may accidentally make payments to the wrong merchant or select the wrong UPI ID.
  • Review UPI statements: Go through your bank statement or UPI transaction history to verify that the payment was indeed unauthorized. Make a note of the transaction ID, merchant name, and payment amount.
  • Ensure no active subscription: If the payment was for a service or product, confirm that you haven't accidentally subscribed or agreed to auto-renewal or recurring payments with that merchant.
• Contact the Merchant
  
  • Inform the merchant: If you find that the transaction is unauthorized, contact the merchant's customer service immediately. Explain the situation, provide them with the transaction details (UPI ID, transaction ID, and amount), and request a refund.
  • Follow up: Ensure that you keep a record of all communication with the merchant. If the merchant agrees to the refund, ensure that the amount is credited back within the specified time.
• Report the Issue to Your Bank or Payment Provider
  
  • Immediately notify your bank: Inform your bank about the unauthorized UPI payment. Most banks have a fraud resolution department that handles such cases. Share the details of the disputed transaction, and request an investigation into the payment.
  • Raise a complaint: Many banks provide options to file complaints via their mobile app, website, or customer service. Provide all necessary transaction details, and request a chargeback or refund for the disputed amount.
  • Bank's dispute resolution: Banks typically have a time window (usually 7 to 30 days) to resolve UPI transaction disputes. They will investigate the issue and may reverse the payment if found to be fraudulent or unauthorized.
• Check the UPI Payment App
  
  • If you used a UPI app (e.g., Google Pay, PhonePe, Paytm), check if the app has a dispute resolution feature for unauthorized payments.
  • File a complaint within the app: Many UPI apps allow users to report unauthorized transactions directly through their support section or transaction history.
  • Submit evidence: Provide any evidence such as screenshots, UPI transaction details, and proof of communication with the merchant.
• Request a Chargeback or Refund
  
  • If the merchant is unresponsive or refuses to process the refund, request a chargeback from your bank or payment service provider.
  • A chargeback is when the bank reverses the transaction and returns the funds to the consumer. Most banks and UPI apps offer chargeback services for unauthorized transactions, provided the consumer acts quickly.
• File a Complaint with the Payment Gateway
  
  • If the merchant is uncooperative or the payment was processed through a third-party payment gateway (e.g., Razorpay, PayU), contact the gateway's customer support and file a complaint for fraudulent transactions.
  • Provide proof of unauthorized payment and request that they investigate the issue and issue a refund.
• Escalate the Issue to Consumer Protection Authorities
  
  • If you have not received a satisfactory resolution from the merchant, bank, or payment app, escalate the issue to consumer protection authorities.
  • In India: You can file a complaint with the National Consumer Helpline (NCH) or take the matter to a Consumer Forum under the Consumer Protection Act, 2019. You can also file a complaint with the Reserve Bank of India (RBI) if the issue involves payment fraud or financial regulations.
  • In the US: You can report unauthorized UPI transactions to the Federal Trade Commission (FTC) or your bank’s fraud department.
  • In the European Union: File a complaint with the European Consumer Centre (ECC) or use the Online Dispute Resolution (ODR) platform for e-commerce issues.
  Consumer protection agencies can help facilitate refunds or take legal action against the merchant for fraudulent transactions.
• Monitor Your Account
  
  • Keep monitoring your UPI transactions: After reporting the dispute, continuously check your bank account and UPI app for any other unauthorized transactions.
  • Block UPI merchants or IDs: If possible, block the merchant’s UPI ID or disable recurring payments to prevent further unauthorized debits.

Common Causes of Unauthorized UPI Merchant Payments

• Phishing Scams: Fraudsters may trick users into sharing their UPI credentials or one-time passwords (OTPs) via phishing emails, messages, or fraudulent websites, leading to unauthorized payments.
• Hacked UPI Accounts: If your UPI account or linked mobile number is compromised, attackers could make unauthorized payments to merchants without your consent.
• Payment Gateway Errors: Sometimes, technical glitches or errors in the payment gateway can result in unauthorized deductions while making an online payment.
• Accidental Payments: Some consumers may accidentally authorize payments or confirm transactions without realizing that the amount is being debited to a merchant.
• Recurring Payment Setup: Users may inadvertently set up automatic recurring payments for subscriptions, and the merchant might charge them without the consumer’s active approval.

Example

A consumer makes a UPI payment of ₹2,000 to a merchant via Google Pay for a product but does not receive any order confirmation. Upon checking their UPI transaction history, they find that the payment was deducted, but there is no confirmation of the order from the merchant.

Steps the consumer should take:

• Verify the Payment: The consumer reviews their UPI app and confirms that the payment was indeed deducted and shows up in the transaction history.
• Contact Merchant Support: The consumer reaches out to the merchant’s customer support, explaining that the payment was made, but the order was not confirmed. They request a refund.
• Raise a Complaint with the Bank: The consumer contacts their bank's fraud department to report the unauthorized UPI transaction and initiates a dispute process.
• File Chargeback: Since the merchant does not respond in time, the consumer files a chargeback request through the bank to reverse the payment.
• Consumer Forum Complaint: After 30 days, the issue remains unresolved, so the consumer files a complaint with the National Consumer Helpline (NCH) for further assistance.

The consumer eventually receives a refund after the bank investigates and the merchant fails to resolve the issue within the stipulated time.

Consumer Safety Tips

• Do not share UPI PIN or OTPs: Be cautious of unsolicited calls, emails, or messages asking for your UPI PIN or OTP. Legitimate merchants will never ask for these details.
• Enable Transaction Alerts: Set up SMS/email alerts for every UPI transaction to track any unauthorized payments immediately.
• Use Trusted Merchants: Only make payments to verified or reputable merchants to reduce the risk of fraud.
• Monitor Your UPI Transactions: Regularly check your UPI transaction history and bank statements to catch any unauthorized payments quickly.
• Secure Your UPI App: Ensure that your UPI app is password protected or secured with biometric authentication to prevent unauthorized access.