Beyond gullibility: On digital arrest scams

Chief Justice of India Surya Kant’s exasperation, during the Supreme Court’s hearing on October 29 on the “digital arrest” scams, that people still fall for such scams despite abundant warnings and orders from the Court is understandable. About ₹800 crore has been lost to these scams this year even after recoveries, a hefty sum from the savings of individual victims. But this is not merely about gullibility. Scammers posing as CBI or police officers succeed because their victims, older citizens in particular, defer to or fear law enforcement. When Indian police are widely seen as high-handed towards ordinary citizens and as serving only the powerful, the threat of an “arrest” over a video call cannot be that implausible for many. That said, the Court’s pressing of the Reserve Bank of India to finalise its KYC Amendment Directions, 2026, which require banks to flag suspected mule accounts and put temporary debit holds on them, is welcome. CBI investigations have shown that mule accounts are central to scammers laundering their proceeds after duping victims and that bank staff have, in some cases, helped open them. With the availability of complete transaction histories and AI tools, banks can now spot anomalous transactions faster. The Attorney-General’s assurance that the directions will be in force by December 31 is also welcome. The Court’s insistence that banks compensate victims addresses an issue with the RBI’s zero-liability provisions. Its 2017 circular covers only unauthorised transactions, leaving victims who were coerced into making transfers without any recourse.Yet, full compensation for the victims whenever banks are found wanting in due diligence must be implemented with care as this might force banks to flag far more than the actual mule accounts. Already the RBI directions cast a wide net. Any transaction of ₹1,000 or more that is ‘unusual’ for an account holder’s declared profile, or linked to a reported account, can be held for up to 60 days, and longer if directed by the police. In cases where small traders and Jan Dhan account holders have unknowingly received transfers from mule accounts, freezing their accounts for two months or more is a disproportionate penalty. Also, the Court’s suggestion that unusual transactions must be automatically reported to the police and physically verified raises privacy concerns. These measures must ensure that genuine account holders are not penalised for bank failures. Many of these scams are run from compounds using trafficked Indians in conflict-ridden parts of Myanmar and in Cambodia and Laos where they have thrived due to some degree of official patronage. India must use its clout to pressure these regimes. Published - October 31, 2026 01:06 am IST