With cyber fraud cases rising sharply across India, the Centre is preparing a new law to criminalise 'digital arrest' scams—a form of cybercrime in which fraudsters impersonate law enforcement or government officials to intimidate victims into transferring money.

The move comes amid growing financial losses from cybercrime. According to data tabled in Parliament, Indians lost ₹22,845.73 crore to cyber fraud in 2024, marking a 206% increase over the previous year. Among the fastest-growing frauds are so-called digital arrest scams, where criminals exploit fear and psychological pressure to extort money.

What is a digital arrest scam?

A digital arrest is a fraudulent scheme in which cybercriminals falsely claim that a person is under investigation or facing arrest for offences such as money laundering, drug trafficking, financial fraud or customs violations.

The scammers often impersonate officials from agencies such as the CBI, Enforcement Directorate (ED), police, customs authorities or even Interpol. Using fake identities, forged documents and convincing video calls, they create the impression that the victim is part of an official investigation.

There is no legal concept of a "digital arrest" under Indian law, and no genuine law enforcement agency conducts arrests or investigations in this manner over phone or video calls.

How do cybercriminals trap victims?

Experts say the scam generally unfolds in three stages:

1. The trap

Victims typically receive a phone call about a seemingly routine issue, such as:

• A suspicious courier or parcel
• A pending KYC verification
• A customs clearance issue
• A bank account linked to criminal activity

Once the caller gains the victim's attention, the conversation escalates into allegations of serious criminal offences.

2. Intimidation

Fraudsters then create panic by threatening:

• Immediate arrest
• Freezing of bank accounts
• Passport cancellation
• Criminal prosecution

To appear legitimate, they use:

• Fake caller IDs
• Forged government documents
• WhatsApp or Skype video calls
• Backgrounds resembling police stations or government offices
• Fake identity cards of senior officials

Victims are often instructed not to disconnect the call or contact family members, lawyers or friends, claiming the "investigation" is confidential.

3. Extortion

Under intense psychological pressure, victims are persuaded to transfer money as:

• Security deposits
• Verification charges
• Bail amounts
• Fine payments

Payments are usually demanded through UPI, bank transfers or cryptocurrency, making recovery more difficult.

Why is the government introducing a new law?

The Centre is drafting legislation to specifically tackle digital arrest scams, which current laws do not adequately address.

The proposed framework is expected to include:

• A standalone offence specifically covering digital arrest fraud with stricter penalties.
• Powers to freeze assets of suspected cybercriminals during investigations to prevent the transfer of illicit funds.
• Stronger provisions against emerging technologies, including scams involving deepfakes, AI-generated impersonation and other sophisticated cyber fraud techniques.

The move follows growing concerns over the evolving nature of cybercrime and calls for stronger legal safeguards.

Why are existing laws considered inadequate?

Authorities believe several challenges limit the effectiveness of current legal provisions:

• Cybercriminals often operate from different states or countries, making investigations more complex.
• Criminal networks increasingly use the dark web, encrypted communication and Ransomware-as-a-Service (RaaS) platforms.
• Many victims do not report cyber fraud due to fear of embarrassment or reputational damage, allowing scammers to continue targeting others.

How to protect yourself from a digital arrest scam

Cybersecurity experts advise citizens to remain cautious and follow these safety measures:

• Remember that Indian law does not recognise "digital arrest."
• No genuine police officer, CBI, ED or government official will demand money over a phone or video call.
• Never share OTP, Aadhaar details, bank account information or passwords with unknown callers.
• Verify the identity of anyone claiming to represent a government agency by contacting the department through its official channels.
• If you receive a suspicious call or message, disconnect immediately and avoid engaging with the caller.
• Report cyber fraud promptly through the National Cyber Crime Helpline (1930) or the National Cyber Crime Reporting Portal.
• Suspicious calls, messages and mobile numbers can also be reported through the Sanchar Saathi platform to help authorities investigate fraudulent activities.

As cybercriminals adopt increasingly sophisticated tactics, officials say public awareness remains one of the strongest defences against digital arrest scams. The proposed legislation aims to strengthen India's legal framework while helping law enforcement respond more effectively to technology-driven financial fraud.