According to Livemint, a flaw in Axis Bank's reward point allocation system allowed some consumers to get reward points they had not earned. Reward points are often credited to clients' accounts by banks in proportion to the value of the transaction; the larger the transaction, the more reward points are awarded. Nevertheless, the reward points associated with a transaction are also revoked if a client cancels it.
Axis bank did not comply with this requirement for an unspecified number of transactions in 2023.
How did customers exploit Axis Bank's loophole?
Several Axis bank clients took advantage of this weakness by using e-commerce sites to place expensive orders. Before canceling the purchases, this enabled them to accrue commensurate incentives. Without taking away the reward points, Axis bank ultimately refunded the transaction money.
Before being closed in january 2024, this flaw remained open for two years, according to Sumanta Mandal, founder of TechnoFino, an online review site for credit cards and other financial goods, who spoke to Livemint.
How is Axis bank fixing the issue?
The extra reward points that consumers receive are now being refunded by the bank. Axis bank has only started taking points out of the Edge Rewards accounts of the affected customers who are already clients. When there is an inadequate amount, the accounts' balances go negative, and the clients must pay the difference in cash.
"EDGE REWARD Points from canceled, reversed, or EMI transactions on your Axis bank credit card(s) between april 23 and january 24 were not reversed due to a technical issue. An email sent to a consumer stated, "Your EDGE REWARDS account has now been credited with these points."
Axis bank pursuing former customers too
Customers who took advantage of the loophole but are no longer with Axis bank are also being pursued by the bank.
Notices requesting payment based on the value of their excess awards have started to arrive.
Experts say it's still unclear how Axis bank will create a statement for a former client who doesn't voluntarily pay the amount. Former clients might not be very motivated to settle the claims if there is no outstanding balance that could affect their credit score.
However, Axis bank has cautioned that noncompliance might have legal repercussions.
Is Axis bank Justified?
To support the recovery effort, Axis bank is citing Clause G of its Most Important Terms and Conditions (MITC). According to the provision, the corresponding sum will be turned into a statement debit that has to be paid back before the card is formally canceled if the cardholder has a negative rewards balance at the time of account closure.
Critics counter that many of these former consumers had already closed their accounts when the rule was implemented.
Axis bank did not comply with this requirement for an unspecified number of transactions in 2023.
How did customers exploit Axis Bank's loophole?
Several Axis bank clients took advantage of this weakness by using e-commerce sites to place expensive orders. Before canceling the purchases, this enabled them to accrue commensurate incentives. Without taking away the reward points, Axis bank ultimately refunded the transaction money.
Before being closed in january 2024, this flaw remained open for two years, according to Sumanta Mandal, founder of TechnoFino, an online review site for credit cards and other financial goods, who spoke to Livemint.
How is Axis bank fixing the issue?
The extra reward points that consumers receive are now being refunded by the bank. Axis bank has only started taking points out of the Edge Rewards accounts of the affected customers who are already clients. When there is an inadequate amount, the accounts' balances go negative, and the clients must pay the difference in cash.
"EDGE REWARD Points from canceled, reversed, or EMI transactions on your Axis bank credit card(s) between april 23 and january 24 were not reversed due to a technical issue. An email sent to a consumer stated, "Your EDGE REWARDS account has now been credited with these points."
Axis bank pursuing former customers too
Customers who took advantage of the loophole but are no longer with Axis bank are also being pursued by the bank.
Notices requesting payment based on the value of their excess awards have started to arrive.
Experts say it's still unclear how Axis bank will create a statement for a former client who doesn't voluntarily pay the amount. Former clients might not be very motivated to settle the claims if there is no outstanding balance that could affect their credit score.
However, Axis bank has cautioned that noncompliance might have legal repercussions.
Is Axis bank Justified?
To support the recovery effort, Axis bank is citing Clause G of its Most Important Terms and Conditions (MITC). According to the provision, the corresponding sum will be turned into a statement debit that has to be paid back before the card is formally canceled if the cardholder has a negative rewards balance at the time of account closure.
Critics counter that many of these former consumers had already closed their accounts when the rule was implemented.
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