Nithin Kamath sounds alarm over digital arrest frauds in India

Zerodha cofounder Nithin Kamath on Wednesday flagged the rise of digital arrest frauds in India over the past year, and the vast amounts of money being lost to scamsters.

In a post on X, Kamath said, "Indians have lost over Rs 2000 crores to digital arrest frauds this year. These scams work by creating fear in people. They take advantage of people's tendency to make mistakes when they are afraid."



Kamath detailed how these scams work in a video, and asked people to beware. "The fraud works because we instinctively become afraid and will do whatever it takes to avoid trouble. Don't react in a hurry. Also, block or don't receive calls and messages from unknown numbers," the post read.

"Those of us who are educated may think that no one will fall for such obvious scams, but crores of educated Indians have fallen victim to these frauds," Kamath warned.

What is a digital arrest?

A digital arrest is a type of fraud where cybercriminals impersonate law enforcement or government officials and place victims under a so-called ‘digital arrest’. No such provision exists under the law.

Typically, a person gets a call from someone claiming to be a police officer, who says a courier package in the person’s name has been seized because it contains illegal items such as drugs. The victim gets a WhatsApp video call from a scamster wearing a police uniform, threatening to arrest them or file a case against them.

The scammers then coerce the victim, often a senior citizen, into giving them money and revealing sensitive information, in order to make the case go away.

In September 2024, in a well-known case, SP Oswal, the octogenarian chairman and managing director of the Vardhaman Group, was scammed out of Rs 7 crore by fraudsters using the digital arrest con.

Modus operandi

Digital arrest crimes have become increasingly sophisticated, using advanced methods and extensive personal information. The masterminds, who usually operate from foreign locations, leave the authorities dealing with low-level operatives.

The fraudsters select their targets deliberately. They utilise various methods to acquire sensitive banking information, focusing on elderly customers. Their techniques include social engineering, data breach exploitation, and collaboration with corrupt bank staff, who share confidential customer information.

The criminals obtain SIM cards with fake documents and use multiple cards, one per target, to appear legitimate. They acquire these cards in bulk through contacts in the telecom industry or from retailers, who sell them without verifying identities.