Executive summary: An Indian woman lost over 58 million rupees in a ‘digital arrest’ scam orchestrated by fraudsters posing as law enforcement, and she is now challenging banks for their alleged failure to prevent the fraud, highlighting systemic issues in cybercrime prevention.
The victim, Anjali (a pseudonym), received a phone call in September 2024 from individuals claiming to be from a courier company, who alleged that Mumbai customs had seized a drug parcel addressed to her. The scammers, impersonating police officers, threatened her with imprisonment and harm to her son, keeping her under 24/7 video surveillance on Skype for five days. During this period, they coerced her into liquidating her savings and transferring the funds, resulting in a loss of 58.5 million rupees ($663,390).
Government data shows that such ‘digital arrest’ scams have become increasingly common in India, with reported cases nearly tripling from 2022 to 2024, reaching 123,000 incidents. In response, the Indian government has launched awareness campaigns, including full-page ads and prime ministerial warnings, and has blocked thousands of Skype IDs and WhatsApp accounts linked to the fraud.
Anjali alleges that HDFC Bank, India’s largest private lender, failed to detect red flags when she made unusually large transfers. The amounts were 200 times her normal transaction patterns, yet no alerts were triggered, and her relationship manager did not contact her. HDFC Bank dismissed her claims as baseless, stating that the transactions were authorized and reported after a delay, and India’s banking ombudsman closed her complaint, citing rules that place the loss on the customer if fraud is deemed their mistake.
The money was first transferred to an account at ICICI Bank held by an individual named Piyush, which had a minimal balance beforehand. Anjali questions why ICICI did not monitor the sudden large deposits, which should have raised suspicions under anti-money laundering obligations. ICICI Bank stated that it followed all prescribed procedures, froze the account after notification, and helped trace the account holder, but the ombudsman also closed the complaint against them.
Police investigations revealed that within minutes, most of the funds were funneled into 11 accounts at Sree Padmavathi Cooperative Bank in Hyderabad. Many of these accounts had fictitious addresses, and the holders were untraceable or unaware of the transactions. The former director of the cooperative bank was arrested and remains in jail, accused of facilitating money mule accounts for criminals.
Anjali and other victims have filed a complaint with India’s top consumer court, alleging deficiency of services by banks. A hearing is scheduled for November, as discussions grow about banks’ responsibilities in preventing financial fraud, similar to recent regulations in the UK that require reimbursement in certain cases.
Despite her efforts, Anjali has recovered only about 10 million rupees and faces additional challenges, such as being taxed on the stolen money, as investments redeemed are subject to capital gains tax even when lost to fraud. Her case underscores the need for stronger banking safeguards and regulatory measures to protect consumers from evolving cyber threats.