Supreme Court on Digital Arrests: "Banks Liable for Customer's Loss!"
In a landmark ruling, the Supreme Court has declared that banks cannot be silent spectators while cybercriminals drain accounts. Detecting suspicious transactions is now the bank's liability, offering relief to millions of Indians.
For years, victims of "Digital Arrest" and cyber fraud were left helpless, running between police stations and bank branches. Banks often cited "Customer Negligence" (OTP sharing) to reject refund claims. That changes today.
The Supreme Court, while hearing a plea on rising cybercrimes, questioned why banks, despite having advanced AI systems, fail to stop transactions that are clearly abnormal.
The Core Issue: "Digital Arrest" Scams
In a typical Digital Arrest scam, fraudsters pose as CBI or Police officers via video call, claiming the victim's Aadhar is linked to money laundering. They keep the victim under "virtual arrest" for hours or days, forcing them to transfer their life savings to "verification accounts."
The Court's Question: "If a retired pensioner suddenly transfers ₹50 Lakhs to a new account in a remote village at 2 AM, why doesn't the bank's system trigger an alarm?"
The Court's 3-Point Directive:
- Liability Shift: If a bank fails to flag a clearly suspicious transaction pattern, the liability of the loss falls on the bank, not the customer.
- Real-Time Blocking: Banks must implement AI-driven real-time blocking for transfers to accounts flagged by other users or cyber police.
- The 'Golden Hour': A dedicated 24/7 channel must be available to freeze funds within the first hour of reporting.
What This Means for You
This ruling is a massive relief for the common man. Previously, if you were manipulated into transferring money (Authorized Push Payment), banks claimed they were just "payment facilitators." Now, they are "custodians of security."
1. Easier Refunds
If you report a fraud immediately and can prove that the transaction pattern was abnormal (e.g., emptying an FD and transferring it instantly), the bank is obligated to compensate you if their security systems failed to intervene.
2. No More "Digital Arrest" Fear
Cybercriminals rely on fear. They want you to panic and transfer money. With banks now forced to monitor these bulk transfers, the success rate of these scams will drop significantly.
How to Stay Safe? (Despite the Ruling)
While the court is on your side, prevention is better than cure. FinKinetic recommends these 3 steps:
- The "Disconnect" Rule: Real police officers never video call you on WhatsApp. If you get such a call, disconnect immediately.
- Enable Limits: Go to your Net Banking settings and set a daily transfer limit. Even if you are scammed, the loss is minimized.
- Verify: If someone claims to be from the CBI/Customs, ask for their official landline number and call them back.
Worried about Online Scams?
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