The way we live, work, and communicate has changed as a result of our globalised society. We now have the ability to connect, create, and exchange knowledge at a never-before-seen speed thanks to the digital revolution. It has boosted economic expansion, given people more power, and closed gaps between continents. But enormous power also comes with immense responsibility. The digital technologies have all contributed to a substantial spike in cybercrimes in India in recent years. Violent crimes such as financial fraud, data breaches, and cyber-extortion are increasingly being committed online by unscrupulous individuals.
Now, this generation is still exploring every facet of cyber landscape, all while uncovering the vulnerabilities and loopholes that exist within it which ensue a lot of cyber scam and one of them that is prominent these days is digital arrest. While many of us have heard of it, few fully understand how it works or the implications it holds for our digital lives. People receive a call where the scammer images himself as a law enforcement or government agencies and impose several charges and penalties on the victim and interrogate in such a way that the victim get anxious about the investigation. The scammer manipulate the victim and force him to comply with the instructions, the attackers generally reach the victim via Interactive Voice Response call from an international number which further transfers to a WhatsApp videos. The scammers merge the financial and legal aspects in such a way that turns to the mind of victim, if he will cooperate with the scammers then they will be out of the trouble.
The scammers then fabricate the victim in crimes that are exceptional and that can agitate any person to settle up with the scammers. This does not only distress the victim financially but also psychologically and mentally. When several things comes to the victim like they have been caught associated with drug smuggling or gold smuggling and when the scammer details about the victim’s identity and transaction sources then the victim get hold of it more significantly.
Digital arrest scams have emerged as a significant threat in the digital landscape, impacting consumer confidence and financial stability. These scams not only result in substantial financial losses but also erode trust in digital payment platforms, which is crucial for the growth of e-commerce and online banking. As financial institutions navigate this complex environment, they must adopt proactive strategies to safeguard their customers and restore faith in digital transactions.
An Increase In Cyber crimes
Over the last ten years, cybercrime incidences have dramatically increased in India. In India, cybercrime instances increased by 11.8% between 2020 and 2021, totalling over 52,974 cases, according to the NCRB’s 2021 report. This rise is a part of a larger pattern that has been seen since 2016: the number of cybercrime cases is rising annually. With 44,735 incidents in 2019, the nation had a 23.2% rise in cybercrimes between 2019 and 2021. With almost 60% of all cybercrime cases that are filed, financial fraud is still the most prevalent type of cybercrime in India. According to NCRB data, there were 31,142 fraud instances reported in 2021, a significant increase over the 24,386 cases that were reported in 2020. The growth of digital payment networks and e-commerce has presented fraudsters with new opportunities to take advantage of unsuspecting consumers. Malware and hacker attacks also increased, with 10,164 instances classified as “computer-related offences” in 2021. Over 17,000 WhatsApp accounts connected to digital arrest scams have been blocked by the Ministry of Home Affairs after an investigation revealed global criminal networks.
Impact of Online Scams on the Indian Economy
Online payments are becoming the backbone of India’s financial system as the country transitions to a digital-first economy. From villages to Delhi – ‘Digital India’ has reshaped how citizens interact with money. However, this transformation has also brought to light a growing vulnerability: a surge in digital scams that threaten to undermine the very progress it has fostered.
Scams, particularly an Authorized Push Payment (APP) scam, occur when victims are tricked into willingly transferring rupees – with tactics that range from fake investments and legal notices to emotional manipulation. Scams are very different from traditional fraud that involves unauthorized access to bank accounts or identity theft. With the explosion in transactions via Unified Payments Interface (UPI), Real-Time Gross Settlement (RTGS), and Immediate Payment Service (IMPS), there is a staggering increase in these scams. Financial institutions face rising costs associated with fraud prevention measures and compensating victims. This can lead to higher fees for consumers and reduced investment in new technologies. Besides this, Consumers are becoming more cautious with their online transactions, often opting for cash payments or traditional banking methods. This shift could hinder the adoption of digital payment solutions that are essential for modern commerce.
In the illegal parcel scam, scammers take advantage of the current surge in e-commerce deliveries. With online shopping becoming commonplace, scammers pose as courier services or law enforcement officials and call unsuspecting individuals. During their call they threaten them claiming that a package addressed to the victim contains illegal or prohibited items such as drugs or weapons. To add credibility, they may conduct video calls, posing as fake police officers.
Know Your Customer — KYC — scams exploit the routine updates required by banks and mobile service providers. Fraudsters pose as representatives from banks or telecom providers, call unsuspecting individuals and urge them to update their KYC details to avoid service suspension. Victims often receive fake SMS alerts with malicious links or are contacted by phone, where scammers “assist” them in the process through an app that actually takes over the phone of the victim and give full access to the scammer. This access is then used by the scammers to open sensitive apps, like a bank or payment app, or to read OTPs.
The cases of the stock market investment scams are also rising. In this scam, fraudsters target individuals eager to make quick profits. Scammers pose as financial advisors or brokers and connect with victims on platforms like WhatsApp, offering guaranteed high returns on investments. Victims are often lured into joining fake groups where other participants appear to be earning profits, creating a false sense of legitimacy.
Legal and Financial Burden on Consumers
Digital scams are also creating a growing legal and financial strain for both consumers and banks. While victims suffer financial losses, banks face the dual risks of financial impact and reputational damage, with recovery rates often remaining shockingly low. In India, the compensation for scam victims, especially in cases involving APP scams, is determined based on specific circumstances, and banks are not legally required to make restitution as would be the case in other countries.
Governments and regulators are also stepping up – In India, the Reserve Bank of India (RBI) has recently introduced AI-powered initiatives designed to protect the banking system from scams, alongside strengthened cybercrime cells and public awareness campaigns for customers.
Way Ahead
To authentically regulate this alarming trend, more proactive and engaging strategies must be implemented to educate the public. Awareness campaigns through various media channels and partnership with educational institutions are the measure that can help to make public awareness after the identification of specific crime. However greater emphasis should be placed on making the cyber web more protected and shielded, so that the data of the users of cyber web cannot be misused, and making the generation equipped to face such challenges on future.
Dr.S.Krishnan is An Associate Professor in Seedling School of Law and Governance, Jaipur National University, Jaipur
Divyanshi Agarwal is 1st year student of BBALLB (H) of Seedling School of Law and Governance, Jaipur National University, Jaipur.
Aatmja Joshi is 1st year student of BBALLB (H) of Seedling School of Law and Governance, Jaipur National University, Jaipur.