Supreme Court of India Issues Guidelines to Combat Digital Fraud

The Supreme Court of India has set forth comprehensive guidelines aimed at mitigating the increasing incidence of ‘digital arrest’ scams. In a recent ruling, the court instructed the Reserve Bank of India (RBI) to establish a standard operating procedure (SOP) for financial institutions within four weeks. It further mandated the formation of an inter-departmental committee to explore a shared liability framework and mechanisms for compensating victims.

During the proceedings, presided over by Chief Justice of India Surya Kant and Justices Joymalya Bagchi and V Mohana, the court reviewed a status report from the Indian Cyber Crime Coordination Centre (I4C). This report revealed that money had been restored in 36,290 cases, amounting to a total of Rs 18.05 crore. The restoration involved 57 banks and affected individuals across all states and Union Territories. The Central Bureau of Investigation (CBI) has taken action on these matters, identifying victims through 67 frontline bank accounts and conducting searches at 93 locations in 16 states. Although noting a reduction in cases, the judges underscored the necessity for robust mechanisms to ensure rapid responses and ongoing vigilance.

The RBI is now tasked with implementing the SOP, which will include provisions for temporary debit holds on accounts linked to cyber fraud. Essential aspects of this procedure encompass a grievance redressal mechanism and a model for restoring lost funds, alongside efforts to raise public awareness regarding these issues. Registrars General of high courts have been instructed to inform the courts dealing with account freezes about this redressal system, allowing affected individuals to utilise it prior to further legal action.

In addition, the Supreme Court has directed every state and Union Territory to formalise State Cyber Crime Coordination Centres within the same four-week deadline. They must also adopt the electronic zero First Information Reporting (FIR) system in consultation with the I4C and with assistance from the Ministry of Home Affairs.

Authorities are expected to expedite the processing of cases related to the freezing of accounts resulting from cyber fraud. The inter-departmental committee is also required to create detailed advisories for widespread public information campaigns aimed at preventing both cyber crime and digital arrest scams. This includes educating the public about available grievance and restoration modules, as well as the SOP from the Ministry of Home Affairs concerning the custody and restoration of defrauded funds.

Recognising the pressing need for enhanced victim protection, the court has asked the committee to investigate the feasibility of a shared liability approach and compensation for victims. Legal Services Committees across India have been tasked with conducting educational initiatives about prevention, cybersecurity, and recovery options.

Furthermore, the committee will look into the possibility of lowering the financial threshold for CBI investigations related to cyber fraud and will consider how to aggregate cases that involve the same organised criminal network. Separately, the Ministry of Electronics and Information Technology, along with the Department of Telecommunications and the I4C, has been instructed to evaluate the practicality of implementing time-based restrictions on telecom services for voice and video calls. They are to submit their findings to the court regarding feasibility and alternative options.

The court has indicated that this matter will be revisited in September for further progress updates.