Digital Arrest Scams in India: How They Work and How to Protect Your Money

In September 2024, a 39-year-old digital marketing executive from Gurugram lost ₹5.85 crore — her entire life savings — in just 72 hours. She liquidated her mutual funds, withdrew her fixed deposits, and transferred everything to accounts controlled by scammers. The weapon? Not a gun or a knife, but a phone call from people claiming to be from the income tax department.

This is what is now known as a digital arrest scam — one of the fastest-growing cyber frauds in India. And it could happen to anyone.

What is a Digital Arrest Scam?

A digital arrest scam is a type of cyber fraud where criminals impersonate law enforcement officers, tax officials, or judges over phone or video calls. They claim the victim is involved in illegal activities — money laundering, tax evasion, or drug trafficking — and must remain on the call (under "digital arrest") while the matter is "resolved."

The entire setup is designed to create panic and isolate the victim from family and friends who might talk sense into them.

How the Scam Works: Step by Step

Here is the typical anatomy of a digital arrest scam:

Step 1: The Initial Call

You receive a call — often from a number that appears official. The caller claims to be from the Income Tax Department, CBI, Narcotics Bureau, or even the RBI. They say suspicious transactions have been detected in your bank account or Aadhaar has been linked to criminal activity.

Step 2: The Escalation

The call is "transferred" to a senior officer. Sometimes, they initiate a video call where someone in a police or judge uniform appears in what looks like a government office. They show fake arrest warrants and FIR copies.

Step 3: The Digital Arrest

You are told you cannot disconnect the call, leave your home, or contact anyone. They say this is required by law and any deviation will result in immediate physical arrest. This is the "digital arrest" — complete psychological control.

Step 4: The Money Transfer

Under pressure, you are asked to transfer money to "government accounts" for verification or as a "refundable security deposit." The money goes to mule accounts controlled by the scam network. Some victims are asked to liquidate FDs, mutual funds, and even take loans.

Why Educated, Wealthy People Fall for It

Digital arrest scams specifically target financially well-off individuals. The psychology is calculated:

• Fear of authority: Most Indians have deep-rooted respect (and fear) of government agencies like the IT department and CBI

• Isolation: Victims are told not to speak to anyone, cutting off their support system

• Urgency: The scammers create artificial time pressure — "transfer within 2 hours or face arrest"

• Sophistication: Professional setups with uniforms, fake documents, and scripted dialogues make it convincing

The Scale of the Problem

According to the Indian Cyber Crime Coordination Centre (I4C), digital arrest scams accounted for over ₹2,140 crore in losses in the first 10 months of 2024 alone. The National Cyber Crime Reporting Portal (cybercrime.gov.in) receives thousands of complaints monthly related to this fraud.

Prime Minister Narendra Modi himself addressed the issue in his Mann Ki Baat broadcast, warning citizens about digital arrest scams and emphasising that no government agency conducts arrests or investigations over phone or video calls.

How to Protect Yourself and Your Money

Immediate Red Flags

• Any call claiming you are under "digital arrest" — this concept does not exist in Indian law

• Requests to stay on a video call and not contact anyone

• Demands to transfer money to "safe accounts" or "RBI accounts"

• Threats of immediate arrest if you don't comply

• Callers who refuse to let you verify their identity independently

Protective Steps for Your Finances

• Set transaction limits: Keep daily transfer limits on your bank accounts low. This buys you time even if you momentarily panic

• Enable cooling periods: Many banks offer a cooling period for new payees. Enable this feature — it creates a mandatory delay before large transfers go through

• Don't keep all savings in one account: Spread your money across FDs, mutual funds, and different bank accounts. This makes it harder for scammers to drain everything quickly

• Use our FD Calculator and SIP Calculator to plan how to distribute your savings across instruments with different lock-in periods

• Set up multi-factor authentication: Ensure large transactions require both OTP and biometric or email confirmation

What to Do If You Get Such a Call

1. Hang up immediately. No government agency arrests people over phone calls

2. Call 1930 — the national cyber crime helpline — and report the number

3. File a complaint at cybercrime.gov.in

4. Contact your bank immediately if you have already transferred money — quick action can help freeze the recipient account

5. Tell someone. The scam works by isolating you. Break the isolation

The Bottom Line

Digital arrest scams exploit fear, not technology. No matter how convincing the caller sounds, remember: Indian law enforcement will never ask you to transfer money over a phone call. They will never conduct court proceedings on video. And the concept of "digital arrest" simply does not exist.

Your best defence is awareness and a well-structured financial plan that doesn't put all your eggs in one basket. Use tools like our FD Calculator and SIP Calculator to build a diversified savings strategy that is resilient — not just to market volatility, but to fraud.

Stay alert. Stay informed. Protect your money.