The accused identified as Rattan Labana, Amitoz Singh and Rajveer Singh of Mohali district, were arrested two days back.
The gang's modus operandi was to befriend students and lure them to movies and parties and to subsequently blackmail them and extort money from them, police said.
The gang members would post photographs of themselves over the social networking sites with luxury cars and other vehicles "to entice youngsters by alluring them with their patronage and assuring them that no one would dare to touch them so long as they were under their protection", they said.
Police said the accused had also been abusing and threatening the school children on Facebook, over mobile phones and when the students were on the way from school to their houses.