Digital Arrest Scam: Consumer Panel Issues Notices To Banks Over Service Deficiencies | Banking and Finance News

Last Updated:July 14, 2025, 08:46 IST

Digital arrest scams target bank customers, causing financial losses. The NCDRC flagged service deficiencies in banks and may seek support from central agencies.

A few victims of digital arrests have filed petitions that were admitted in an order dated March 3 and on July 07.

Digital Arrest Scams: Digital arrest, a new modicum of cybercrime in the digital world, has become a new headache for banks. Several of their customers have reported losing a huge sum of money due to digital arrest scams across the country recently. Now, several banks have received notices from the National Consumer Disputes Redressal Commission (NCDRC), which has flagged “deficiencies in service” in cases involving victims of digital arrest fraud, according to a report of Indian Express.

A digital arrest scam is a type of cyber fraud where scammers impersonate government or law enforcement officials and threaten the victim with fake criminal charges—like money laundering, illegal transactions, or drug trafficking—to extort money.They hold victims digitally hostage for hours or even days, making them part with personal/financial information and money.

A few victims of digital arrests have filed petitions that were admitted in an order dated March 3 and on July 07.

The NCDRC bench stated that if it finds the complaints to be “maintainable,” it may consider seeking support from central agencies such as the Financial Intelligence Unit (FIU) and the Indian Cyber Crime Coordination Centre (I4C) under the Home Ministry, The Indian Express report stated.

While speaking to The Indian Express, Mahindra Limaye, the lawyer for all three victims, said a victim from Mumbai had suffered the digital arrest scam last year and on that lost a sum of Rs 5.88 crore.

Limaye told The Indian Express, “What is significant is that the Consumer Commission bench has sent notices to all banks in the chain of the digital arrest cases, including the beneficiary banks. The allegations of violation of guidelines of the Reserve Bank of India (RBI) and the deficiency of services will now be heard in detail by the Commission which is a first for the banking sector…”

How The Digital Arrest Scam Works:

The Call or Message:

You receive a call, WhatsApp message, or video call from someone pretending to be a police officer, government official, CBI officer, or even an RBI official. Sometimes, they even show fake ID cards or use edited videos to look official.

Scare Tactics:

They claim that a parcel, Aadhaar, PAN, or bank account in your name is linked to illegal activity (like drugs or money laundering).

They may say:

“Your ID was used in a crime.”

“A case has been registered against you.”

“You will be arrested unless you cooperate.”

Digital Arrest:

Victims are asked to stay on a video call constantly — they’re told not to contact anyone and are “digitally arrested.” The scammer acts like they’re monitoring the victim as if under official custody.

Extortion Begins:

The scammer demands money to “clear” your name, “verify” your identity, or “settle the case.” Victims are forced to transfer large sums under pressure, often through UPI, crypto, or gift cards.

Emotional Manipulation:

They use fear, shame, and urgency to trap the victim. Some victims have stayed on video calls for hours or even days in panic.

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