Reasons For Frozen Bank Accounts Through Cyber Complaints And How To Deal With Them?

Why Bank Accounts Get Frozen?

Various reasons can lead to the freezing of bank accounts, even when the account holder has done nothing wrong. Here are some common causes:

1. Suspicious Transactions: Banks may flag and freeze accounts with a history of fraudulent or unauthorized transactions.
2. Scam Involvement: Falling victim to scams like fake lottery winnings or fraudulent remittance offers can lead to an account freeze.
3. Illegal Online Gaming: Accounts associated with unauthorized or illegal online gaming activities often face restrictions.
4. Stolen Funds: If someone transfers stolen money into an account, banks may freeze the account to prevent further misuse or illegal activity.

How To Handle A Frozen Bank Account Due To Fraud Allegations?

If your bank freezes your account due to suspected fraud, take these steps to resolve the issue and prove your innocence effectively:

1. Contact your bank immediately and ask why they froze your account.

Request all relevant documentation to understand the issue better.
Visit your local police station or Cyber Crime Cell to file a formal complaint. Provide detailed information about your situation along with supporting documents.
Cooperate fully with law enforcement by responding promptly to requests for information or additional documentation. Proving your innocence requires transparency and active participation.
Consult a professional specializing in cybercrime or financial disputes to understand your rights and navigate the legal process effectively.
If the matter remains unresolved after following the above steps, consider filing a writ petition in court to protect your rights and seek a resolution.

Illustration:

Imagine a person named A participates in an illegal online lottery. He pays Rs. 10 Lakhs through his bank account to purchase a winning ticket. Unfortunately, he loses. To recover his money, A files a complaint with the cybercrime department, alleging that someone fraudulently took funds from his bank account without his knowledge or consent.

The cybercrime department registers the complaint and immediately freezes the bank account of the lottery company. However, the lottery company has already distributed Rs. 10 Lakhs among several accounts, as follows:
Rs. 7 Lakhs was transferred to a marketing partner (Person B) as a payout.
Rs. 3 Lakhs was distributed to winners, including Person C, who received Rs. 1 Lakh, and further transferred Rs. 25,000 to his sister, Person D, as a gift.

Now, the cybercrime department, using its powers under Section 102 of the Code of Criminal Procedure, 1973, now replaced by Bharatiya Nagarik Suraksha Sanhita Section 106, freezes the bank accounts of B, C, and D, even though they are not directly responsible for the original complaint.

Here’s why:

1. The department needs to secure the Rs. 10 Lakhs that A claims was taken fraudulently.
2. To ensure traceability of funds, banks freeze the accounts where the disputed money has landed.

Issues And Misuse Of Power
Instead Of freezing Just The Disputed Amounts:

B’s account with Rs. 7 Lakhs is entirely frozen, even if it contains Rs. 50 Lakhs.
C’s account with Rs. 1 Lakh is frozen, even though the disputed amount is just Rs. 1 Lakh.
D’s account with Rs. 25,000 is frozen, despite being a gift.

Remedies for the Affected Persons

If you face a situation where someone unjustly freezes your account, you have several options to take action:

1. Settlement with the Complainant (A): Negotiate and resolve the issue directly.
2. Settlement with the Police: Request the cybercrime department to unfreeze the account after proving your innocence.
3. Legal Recourse: File a petition in the Lower Court or High Court, challenging the blanket freezing of your account. Courts instruct the police to freeze only the disputed amount and release the rest.

How To Prevent Your Bank Account From Being Frozen?

To safeguard your bank account from being frozen due to suspicious activity, follow these proactive steps:

1. Monitor Your Transactions: Regularly review your bank statements for unauthorized or unusual activities.
2. Inform Your Bank: Notify your bank in advance if you plan significant purchases or travel abroad to help them recognize legitimate transactions.
3. Separate Accounts: Use separate accounts for personal and business finances to avoid triggering suspicious activity alerts.
4. Pay Bills on Time: Stay current on credit card payments and debts to prevent unnecessary complications.
5. Avoid Unsolicited Offers: Be cautious with unsolicited offers, especially those involving lotteries or foreign remittances, to avoid falling victim to scams.
6. Keep Your Account Active: Ensure regular transactions to prevent account inactivity and potential freezes.
7. Respond to Bank Alerts: Promptly address any communications from your bank about your account status or suspicious activity.