In a significant development, the National Consumer Disputes Redressal Commission (NCDRC) has issued notices to multiple banks for their alleged role in digital arrest fraud cases, marking the first time the banking sector is being scrutinised in such matters by the country’s top consumer commission.
The NCDRC, in orders dated March 3 and July 7, admitted petitions filed by victims of digital arrest scams and pointed to “deficiencies in service” by the banks involved. The cases were heard by a bench comprising Justice (Retd.) AP Sahi, President of the Commission, and member Bharatkumar Pandya.
Two victims from Gurugram — who lost Rs 10.30 crore and Rs 5.85 crore — have had their cases clubbed together by the commission. A third case involving a victim from Mumbai, who lost Rs 5.88 crore, will be taken up at the next hearing on November 14.
According to lawyer Mahendra Limaye, who is representing all three complainants, the Commission’s decision to send notices to every bank involved in the transactions — including the beneficiary banks — is unprecedented. He stated, “What is significant is that the Consumer Commission bench has sent notices to all banks in the chain of the digital arrest cases, including the beneficiary banks. The allegations of violation of guidelines of the Reserve Bank of India (RBI) and the deficiency of services will now be heard in detail by the Commission which is a first for the banking sector…”
The Commission is currently examining whether such cases qualify as “consumer complaints” and whether they fall under its “pecuniary jurisdiction.”
In its March 3 order, the NCDRC noted that “customer diligence was clearly compromised” and raised concerns that “RBI guidelines were blatantly violated and no customer protection care was taken.” The order further stated that accounts used by the fraudsters “were maintained seemingly without taking any precautions and no alerts or red flags were raised by any of the Banks in the background that the transactions were all suspicious for huge amounts…”
The Commission has also said it may consider seeking assistance from central agencies such as the Financial Intelligence Unit (FIU) and the Indian Cyber Crime Coordination Centre (I4C) depending on whether the complaints are deemed maintainable.
Banks that have been issued notices and some of which were represented during the July 7 hearing include ICICI Bank, HDFC Bank, UCO Bank, Federal Bank, Sreenivasa Padmavathi Bank, Yes Bank, State Bank of India, and Kotak Mahindra Bank.
Recent figures show a sharp rise in digital arrest frauds, with 1,23,672 reported cases in 2024 alone and losses amounting to Rs 1,935 crore.
In one case now before the Commission, a Gurugram-based victim lost Rs 5.85 crore after her funds were transferred to 141 different bank accounts across the country in just three layers of transactions. The stolen money was withdrawn within seconds or minutes, revealing that a single fictitious or mule account was used to carry out multiple frauds.
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