Supreme Court Asks WhatsApp, Intermediaries to Detail Steps Against Digital-Arrest Scams

WhatsApp LLC and other concerned intermediaries must apprise the Supreme Court of the measures they propose to prevent digital arrest scams and related cybercrimes.

The direction is part of an order uploaded after the October 29 hearing in the suo motu case ‘In Re: Victims of Digital Arrest Related to Forged Documents’. The bench is headed by Chief Justice of India Surya Kant with Justices Joymalya Bagchi and V Mohana. The order says the proposals must address the spread of digital arrest scam in India linked to forged documents and misuse of communication platforms.

Platform details action against accounts

Senior advocate Kapil Sibal, appearing for the messaging platform, told the bench preventive steps had already been taken, including action against 9,400 accounts. An affidavit detailing the steps will be filed, he said. Work is on software to identify suspicious accounts and alert users, he added.

The bench then directed that the proposals of all such intermediaries be simultaneously submitted to the I4C.

Bench presses bank accountability

In the same order, the court said financial institutions must be held accountable for digital arrest scams and other cyber frauds. Banks should compensate victims where investigation establishes that the fraud occurred due to the institution's failure to exercise due diligence.

"We reiterate and emphasize that the regulatory measures proposed by the Reserve Bank of India must mandate and incorporate suitable provisions that require financial institutions to indemnify victims of digital arrest scams and other cyber frauds and pay suitable compensation not less than the amount lost by the customer, where it is established that the fraud or crime occurred due to the failure on the part of the financial institution to exercise due diligence in preventing or reporting the act/incident," the bench said in the order.

During the hearing, the Chief Justice asked why banks could not step in when a customer suddenly sought to transfer an unusually large sum inconsistent with established transaction patterns. The order records that various preventive safeguards must be mandated for every financial institution.

The court has directed the banking regulator to place on record a list of all authorised financial institutions on the next date. It has listed the suo motu matter for further consideration on November 23.