Anjali, a woman living in Hyderabad, was the target of a highly avant-garde scam. She lost an estimated ₹58.5 million (about $663,390) in what has been termed a “digital detention.” Her nightmare began last September, when it all began with an innocent-sounding phone call. That call quickly turned into a nightmare that lasted for five terrifying days.
At the same time, Anjali was pushed to withdraw her assets and wire money under duress. Despite her relentless efforts, she has thus far only been able to recuperate close to 10 million rupees of her lost earnings. Today, she is dealing with dire financial circumstances and emotional distress.
Anjali’s case has drawn attention to significant regulatory gaps within India’s digital banking system. She deposited the missing money into 11 separate accounts. These accounts were maintained at the Sree Padmavathi Cooperative Bank, a branch of the cooperative banking system affiliated with Federal Bank. Alarmingly, she casts doubts upon the regulatory scrutiny of big banks like ICICI and HDFC that ostensibly should protect India’s financial system from mismanagement. She is asking why ICICI allowed several successive fund transfers to her account without triggering any security red flags.
“I often withdrew amounts that were 200 times smaller than the sums I was transferring,” Anjali noted, highlighting the stark discrepancy in her usual banking behavior. “Should the size of transfers that I made all in a matter of under three days not have been enough to raise suspicion and even prevent the crime?”
After her ordeal, Anjali has spent the last year traversing police stations and courts to see justice served. She vowed not to give up until she recovers her missing money. She carefully tracked her dollars to see where they were traveling. Next, we helped her produce an easy to understand spreadsheet illustrating the movement of her savings bank by bank.
Despite her efforts, she faces additional challenges. But now, Anjali is currently being forced to pay taxes on the money that was stolen from her, further worsening her financial distress. In addition to saying HDFC should have done more to prevent these shenanigans, she sounds the alarm on the huge outflows from the suspect account. “How could they allow such a quick outflow without temporarily freezing the account or conducting additional Know Your Customer verification?” she asked.
Even with all the practical steps in place, the emotional toll of the scam has taken its toll on Anjali. “After that, my brain stopped working. My mind shut down,” she expressed, reflecting on the overwhelming pressure she faced during the scam.
Anjali is not alone in her plight. Other victims have joined with her to appeal to India’s highest consumer court. The court upheld their lawsuit against the banks for “lack of services.” Mahendra Limaye, a specialist in banking regulations, underscored the duty that banks owe to their clientele. Banks owe a common law duty of care to customers. He went on to explain that if a bank sees anything unusual in an account that’s outside of their normal transaction activity, they freeze that account and block the transaction right away.
This latest case has turned the spotlight to a larger conversation over the weaknesses inherent in India’s digital banking ecosystem. As technology advances, so do the tactics used by criminals. This leaves countless victims without recourse as regulatory agencies fail to adapt to these shifting landscapes.
