Can banks be held liable for digital arrest scams?

A case being heard by NCDRC could potentially put the spotlight on banks' liabilities

- Shouvik Das & Shayan Ghosh

A precedent-setting digital arrest hearing at India's top consumer court last Monday put the spotlight on banks' potentially heightened liabilities and responsibilities towards their customers amid a surge in digital arrest crimes in the country.

The case, filed with the National Consumer Disputes Redressal Commission (NCDRC) on 24 January, was admitted in March by its president, Justice A.P. Sahi, and 7 July was the first deadline for banks to respond to the complainants' plea.

The complainants have claimed negligence on the banks' part during incidents of digital arrests, and have argued that the lenders are partially responsible for the thefts—and thus should also be held liable for refunding or recovering the money lost.

Banks have rejected this claim, saying that since the losses happened because the users voluntarily made the transactions, they could not be held liable.

The order, a copy of which Mint has reviewed, requires the banks involved to respond to a plea filed by three complainants.

These individuals collectively lost over ₹24 crore ($2.8 million) after falling victim to calls that exploited personal information and impersonated senior law enforcement officials, such as the chairman of the Central Board of Indirect Taxes and Customs, to extort large sums before disappearing.