Supreme Court Flags Alarming Rise in “Digital Arrest” Scams; Directs Banks to Proactively Alert Customers on Suspicious Transactions
New Delhi:
The Supreme Court of India has taken serious note of the rapidly increasing menace of so-called “Digital Arrest” scams, where cyber fraudsters impersonate police, CBI or other enforcement agencies and psychologically coerce innocent citizens into transferring huge sums of money.
The matter was heard by a Bench comprising Justice Surya Kant, Justice Joymalya Bagchi, and Justice N. V. Anjaria, which made strong observations on the responsibility of banks in preventing such frauds.
During the hearing, the Hon’ble Bench observed that banks cannot act as silent conduits when customers suddenly initiate high-value or unusual transactions that are completely inconsistent with their normal banking behaviour. The Court categorically held that banks are trustees of public money and therefore owe a higher duty of care to their customers.
The Court pointed out that if a pensioner, senior citizen, or salaried individual—who generally withdraws or transfers small amounts—suddenly starts transferring sums running into lakhs or crores, the bank must immediately flag such transactions and alert the customer to verify the genuineness of the request.
It was further informed to the Court that the Reserve Bank of India (RBI) has prepared a Standard Operating Procedure (SOP) aimed at tackling cyber frauds, including digital arrest scams. The proposed SOP includes:
Early detection of suspicious or abnormal transactions
Use of technology and AI-based monitoring tools
Temporary freezing of suspicious debits
Mandatory customer alerts and verification protocols
The Hon’ble Bench remarked that mere issuance of RBI circulars is not enough and stressed that effective enforcement, monitoring, and accountability mechanisms must be put in place, warning that banks may also face consequences for failing to act responsibly.
The Supreme Court expressed deep concern over the large-scale financial devastation caused by digital arrest scams across the country, observing that such frauds strike at the very root of public confidence in digital banking and financial systems.
The Court’s strong intervention is being seen as a landmark step towards consumer protection, cyber safety, and institutional accountability, sending a clear message that banks, regulators, and authorities must work proactively to shield citizens from organised cybercrime.
Issued in Public Interest
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