The Supreme Court, led by Chief Justice Surya Kant, expressed concern over the increasing number of digital arrest scams and questioned the role of banks in preventing such frauds. The court also indicated potential directions to hold banks accountable for losses caused by cyber fraud where they had failed to exercise due diligence.
On Thursday, a Supreme Court bench, which included Justices Joymalya Bagchi and V Mohana, heard a suo motu case concerning the growing prevalence of cyber frauds. During the hearing, advocate NS Nappinai, appointed as amicus curiae, informed the bench of a recent case in which a woman lost Rs 2.5 crore to a digital arrest scam.
Chief Justice Kant expressed his concern about the prevalence of digital scams, stating: ‘What we are shocked about – why are people not realising.’
‘What is wrong with victims?’ added Kant. ‘Are they not normal persons?’
He further remarked: ‘What kind of person [are you] in a democratic country if you think you are getting arrested on mobile? Hit the mobile on the wall and the arrest goes.’
The amicus curiae submitted that the fear of arrest was a major factor driving persons to comply with the demands of fraudsters. She added that some psychologists had described the pressure exerted on victims as a form of ‘hypnosis’.
The bench criticised banks and other agencies for failing to put adequate safeguards in place to prevent suspicious transactions linked to cyber fraud.
Kant questioned why banks could not intervene when transactions appeared inconsistent with an account holder’s usual spending patterns, particularly when they had access to the customer’s transaction history. He asked whether existing regulations permitted banks to temporarily withhold unusual transactions, inform the local police and verify the legitimacy of the transactions before processing them.
Attorney General R Venkataramani, representing the government, told the court that steps were being taken to strengthen the system for identifying suspicious transactions. He said banks had improved their ability to flag such transactions in the last six months and that discussions had been held with the Reserve Bank of India to expedite the necessary rule-making.
The Supreme Court indicated that it was considering directions to hold banks accountable for losses caused by cyber fraud where they had failed to exercise due diligence. Kant proposed that banks be required to compensate such persons and face prosecution where fraud occurred because of their failure to take appropriate precautions.
Source:
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