SC amazed at digital arrest scams: ‘What is wrong with victims?’

CJI says awareness campaigns and court orders have failed to stop digital arrest scams

The court is considering making banks liable for victims’ losses if due diligence failures enabled fraud.

The attorney general says digital arrests have declined by 50 per cent after the court’s intervention.

The Supreme Court on Thursday expressed shock at educated people falling prey to digital arrest scams despite public awareness campaigns, media reports and court orders, questioning why victims continued to fear arrest through mobile phones.

“What is wrong with these victims? How are these victims being trapped like this? They can't understand this basic thing? What's fear of arrest on mobile?” Chief Justice of India Surya Kant remarked orally during a hearing.

The CJI added that a person could simply switch off or break their phone to end the supposed digital arrest, questioning why people believed they could be arrested through a mobile device.

The observations came after senior advocate N S Nappinai, the amicus curiae in the case, told the court that digital arrest fraud continued despite efforts to curb it. She cited the case of a woman who lost Rs 2.5 crore in such a scam last week.

“We feel frustrated that all educated people are getting duped,” the CJI said, adding that people could check court websites to verify whether an arrest order existed.

A bench comprising the CJI and justices Joymalya Bagchi and V Mohana was hearing a suo motu case titled In Re: Victims of Digital Arrest Related to Forged Documents, concerning large-scale financial fraud involving digital arrest scams.

The court said banks must act as a “protective umbrella” for customers vulnerable to such fraud. It also indicated that it was considering directions requiring banks to compensate victims and face prosecution where fraud resulted from a failure to exercise due diligence.

“We are proposing to direct that wherever such fraud takes place, bank will compensate victim and suffer prosecution. It has to be done,” the CJI said.

The bench said victims should receive compensation of at least the amount lost if an investigation establishes that a financial institution’s failure to exercise due diligence contributed to the fraud.

Attorney General R Venkataramani told the court that digital arrests had declined by 50 per cent following its intervention. He also said banks were flagging suspicious transactions and that he had held discussions with the Reserve Bank of India on framing rules to address the problem.

The court’s observations signal a possible move towards greater accountability for financial institutions in cases where failures in transaction monitoring or other due diligence measures enable digital fraud.