Supreme Court Orders Banks to Compensate Victims of Digital Arrest Scams

The apex court delivered a landmark judgment directing banks to compensate individuals duped by so‑called digital arrest scams, provided the institutions did not carry out adequate due‑diligence. The ruling came after a series of petitions highlighting how fraudsters impersonate law‑enforcement officials and threaten victims with arrest unless a payment is made through the bank.
The bench emphasized that banks have a statutory responsibility to verify the authenticity of such requests before processing transfers, and any lapse will attract liability for the loss suffered by the customer.
Legal experts noted that the order reinforces existing consumer‑protection norms and could prompt banks to tighten verification protocols for electronic transactions.
Implementation guidelines are expected to be framed by the Reserve Bank of India, which will monitor compliance and ensure that affected customers receive timely restitution.