Supreme Court Directs Tech and Banking Sectors to Combat Digital Arrest Scams

The Supreme Court of India has directed WhatsApp and other digital intermediaries to inform the court of their proposed measures to prevent digital arrest scams and related cybercrimes. A bench comprising Chief Justice Surya Kant, Justice Joymalya Bagchi, and Justice V Mohana issued the directives during ongoing hearings in a suo motu case concerning victims of digital arrest involving forged documents.

During the proceedings, senior advocate Kapil Sibal, representing WhatsApp, informed the bench that the messaging platform has already taken preventive steps by banning 9,400 accounts linked to impersonation and cyber fraud. Sibal added that the company is currently developing software designed to identify suspicious accounts and issue warnings to users. The court instructed WhatsApp and similar intermediaries to submit their comprehensive prevention proposals simultaneously to the Indian Cyber Crime Coordination Centre.

The judicial scrutiny also extended heavily into the financial sector. The Supreme Court emphasized that banks and financial institutions must be held accountable for digital arrest scams and other cyber frauds. According to the bench, financial institutions must indemnify victims and pay suitable compensation—no less than the lost amount—if an investigation establishes that the crime occurred due to a failure in exercising proper due diligence.

Chief Justice Surya Kant questioned why financial institutions fail to intervene when account holders suddenly attempt to transfer unusually large sums of money that contradict their established transaction histories. The court previously outlined several mandatory preventive safeguards for financial entities, including temporarily suspending unusual transactions, automatically notifying the nearest police station, and physically verifying the legitimacy of the requested transfers.

To enforce these standards, the Reserve Bank of India has been directed to submit a list of all authorized financial institutions before the court. The bench will examine the proposed RBI Know Your Customer Amendment Directions for 2026 before they are officially notified by November 30 and operationalized by December 31. The court noted that although cybercrime cases have decreased by 50 percent, victims have still lost approximately 800 crore rupees during the year.

In parallel developments, law enforcement agencies across all states and Union territories have been ordered to submit status reports regarding registered first information reports and ongoing investigations into digital arrest scams. Directors General of Police have been tasked with ensuring compliance, with all reports funneled through an inter-departmental coordinating committee.

Meanwhile, individual incidents continue to highlight the severe human toll of these scams. In a recent case from Bagaha in West Champaran, a local resident named Satish Kumar lost 1,25,700 rupees after cybercriminals posing as Central Bureau of Investigation officers falsely implicated him in a seven-crore-rupee money laundering scheme. The scammers subjected him to continuous video calls and threats of immediate arrest over a period of two weeks before he eventually reported the crime to local authorities.

The Supreme Court has scheduled the next hearing in the matter for November 23, where it will review the preventive safeguards proposed by intermediaries, evaluate the RBI's regulatory framework, and assess law enforcement reports.