Apex Court Hands CBI Nationwide Probe of $335 Million Digital Arrest Scams

India’s Supreme Court on Monday asked the Central Bureau of Investigation (CBI) to lead a nationwide probe into so-called “digital arrest” scams after being told in earlier hearings that victims, many of them senior citizens, have lost nearly ₹3,000 crore (about $335million) in such cyber frauds.

A bench of Chief Justice Surya Kant and Justice Joymalya Bagchi passed the order in a suo motu case and said the scams need the “immediate attention of the premier investigating agency”.

“Digital arrest scams require immediate attention of the premier investigating agency of the country. Therefore, we proceed with a clear direction that the CBI shall first investigate cases on digital arrest scams. The other categories of scams shall be taken up in the next stages,” the bench said in its order.

Digital arrest is a form of cyber-extortion where fraudsters pose as police, probe agencies or court officials over phone or video calls, claim that the victim is “under arrest” in a case, and coerce them into transferring money under threat of jail or seizure of property.

The Court said the CBI will first focus on these digital-arrest cases, while other big fraud flagged by court-appointed amicus curiae N.S. Nappinai such as online investment scams and part-time job scams, will be taken up later if needed. An amicus curiae is an independent lawyer asked to assist the court in complex matters.

Taking aim at the banking system, the bench gave the CBI a “free hand” to examine the role of bank staff under the Prevention of Corruption Act wherever they are suspected of helping open mule accounts used in cybercrime. A mule account is a bank account opened or used in someone else’s name so that criminals can receive and move illicit money without being easily traced.

The Court said that states, Union Territories and their police, along with the CBI, are free to freeze bank accounts used to defraud citizens, to stop further losses while investigations continue.

The judges also pulled in regulators and other agencies. The Court issued notice to the Reserve Bank of India asking why artificial-intelligence and machine-learning tools are not already being used to spot and freeze suspicious accounts and to explore deploying such systems for cyber-fraud detection.

The Court reminded online intermediaries covered by the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021 and telecom service providers of their duty to cooperate with investigations, including by sharing content data and SIM-card details when required.

To support a pan-India probe, the bench told states that have withdrawn general consent for CBI investigations, including opposition-ruled states such as West Bengal, Tamil Nadu, Karnataka and Telangana, to at least grant consent for digital-arrest cases so the agency does not run into jurisdictional roadblocks.

General consent is a standing permission some states give, or withdraw, for the CBI to investigate offences in their territory.

It also asked all states and Union Territories to quickly set up and operationalize regional and state cyber-crime centers to work with the Indian Cyber Crime Coordination Centre (I4C) under the Union Home Ministry and to inform the Court of any hurdles they face.

The Court also noted the “alarming” practice of issuing multiple SIM cards to a single user and asked the Department of Telecommunications to draw up a proposal that can be turned into binding guidelines for telecom firms to tighten SIM-issuance norms and curb fraud.

The digital-arrest matter first reached the Supreme Court after a senior-citizen couple from Ambala and other victims complained that scammers had used forged court orders and fake investigative documents to extort more than ₹1 crore.

In earlier orders, the bench said that “the forgery of documents and the brazen criminal misuse of the name, seal and judicial authority of this Court or a High Court is a matter of grave concern” and that it will deal with these cases with an “iron hand” after being told that about ₹3,000 crore had already been extorted.