“Since you have redeemed X’s excess reward points, which are beyond what the transaction reason should be calculated, we require you to pay INR 23,25,639 to the bank in accordance with the MITC terms…”
The notice is part of the bank’s recent efforts to accumulate reward points through technical vulnerabilities in 2023. The recipient closed his Axis Magnus credit card in December 2023 and was no longer a customer – but the bank is still pursuing repayments.
Vulnerability that triggers repression
Usually, when a credit card transaction is refunded, the reward points earned in that transaction will be reversed. In 2023, Axis Bank failed to cancel the transaction.
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Some customers take advantage of supervision. They placed high-value orders on the e-commerce platform, received corresponding rewards, and then canceled the order. Axis Bank refunded the amount, but did not revoke the reward point.
Industry experts say the key points when reversing the refund is standard practice for all banks.
Technofino founder Sumanta Mandal said the failure lasted for two years until it was fixed in January 2024.
Now, Axis Bank is withdrawing its excess rewards. It has begun deducting points from the affected customers’ edge rewards (ER) accounts. If customers lack sufficient points, their ER balance becomes negative – asking them to pay for cash shortages.
“The edge reward points for cancel/reversal/EMI transactions on the axis bank credit card between April 23 and January 24 were not reversed due to technical issues. These points are now deducted from your edge reward account.”
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Banks and even former customers
Customers who no longer hold Axis Credit Cards are not exempted. Those with closed accounts are notified of payments based on the valuation request of their excess rewards.
Tejas Ghongadi, co-founder of the Points Code, said the bank may post cash equivalent to a negative point balance on the credit card statement of the active cardholder. But for previous clients, the path forward is unclear.
According to experts, it is unclear how the bank will generate a statement for the closed card if the customer does not pay voluntarily. If the unmet balance of their credit score is not met, previous clients may have little incentive to settle claims.
However, Axis Bank warns that non-compliance may lead to legal consequences.
Is axial banking reasonable?
Axis Bank relies on clause G of its Most Important Terms and Conditions (MITC) to justify the recovery work. The clause states that if the cardholder has a negative bonus balance when the account is closed, the equivalent amount will be converted into a statement debit which the debit must be reimbursed before the card is officially closed.
However, critics argue that the rule is introducing the rule after many former clients have closed their accounts.
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Ghongadi said MITC changed later — the rule did not exist when these former customers closed the cards. “The bank’s settlement process is very slow.”
A review of older MITC documents supports his claim: When many affected customers close their accounts, there is no negative reward balance clause.
Sanjeev Moghe, president and head of payments at Axis Bank, said the bank regularly evaluates how customers use credit card benefits.
“(w) The transaction pattern observed by the bank is equal to abuse of benefits and the bank has taken litigation to prevent inappropriate use,” he said.
Experts have differences on whether banks can trace the rules for application retrospectively.
“This clause does not exist in the agreement signed when they are still customers,” Mandal said. “How can the bank charge them retroactively? If the bank reactivates a closed card, for this purpose the client already has NOC from the bank, which can escalate the issue to the Reserve Bank of India (RBI) and even hand the matter over to the Consumer Court.”
Ghongadi noted that while retrospective recovery may violate standard rules, in rare cases it is based on fraudulent acts that banks can justify in carrying out that act.
When a customer sees credit card rewards take action against the customer through abuse. However, these actions are usually swift and therefore act within the scope of the authority of the agreement contract.
What are the dangers of customers
According to Axis Bank, less than 100 people have received the recovery notice. “The number of such determined cards is 72 (0.0004%), which is a small number of bank credit card portfolios,” Moji said.
However, the bank did not disclose the total amount it aims to recover.
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Current cardholders will see the recovery amount reflected in their credit card statement. Experts suggest that those considering challenges should first pay the balance to avoid loss of credit scores before filing a complaint with the bank ombudsman.
However, for some, repayment may not be financially feasible. In three cases, review the email Mint Show recovery amount ₹4.226 million, ₹7.2 million, around ₹600,000-Specification ₹The demand for Rs 23.2 million mentioned above. ”
Mandal believes that the case boils down to contractual responsibility, not morality.
“Many people would make a moral argument about why customers abuse the reward system in the first place. My question is, why does Axis Bank not have proper control?” he said. “Reversing the reward point immediately after returning the transaction is a basic feature. The reward in the review is unfair.”
On banking and finance, Mandal added that the contract agreements are beyond moral considerations. “Suppose you get a loan without insurance, meet with an accident and lose your job. Your employer won’t pay you, and the bank won’t pay, they still need to pay back. The bank won’t think twice before sending the recovery agent to your address.”
Read also | Depreciation is normal. So, why hurt Axis Credit Card Holders?
This is not the first time that Axis Bank has pursued customers over allegedly abusing its credit card. In 2023 and 2024, it canceled cash back cards and suspended reward redemptions, allegedly using personal cards for commercial purposes. The affected individual is asked to provide invoices and other evidence that their transactions are personal.
Game reward systems can be profitable, but cardholders should avoid it because banks always find solutions to scores.
