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Ashraf Engineer
September 14, 2024
EPISODE TRANSCRIPT
Hello and welcome to All Indians Matter. I am Ashraf Engineer
Imagine this. An unsuspecting, not very digitally literate person gets a phone call amid his very busy day. His phone rings and the caller says he’s from their mobile network provider. He says the user hasn’t provided adequate documentation and the SIM card will be blocked immediately. The alarmed user hands over personal data like the Aadhaar and PAN. Hours later, his bank account has been emptied and credit card maxed out.
Seems familiar, doesn’t it?
All of us have received such calls and hopefully most of us would have disregarded them. But there are many among us who don’t. So many Indians are using smartphones and digital banking or payment platforms for the first time and they often fall prey to such digital crimes. The number of such cases is rising tremendously.
Between January and April 2024, Indians are estimated to have lost more than Rs 1,750 crore to digital crime. This led to more than 7.4 lakh complaints lodged on the National Cybercrime Reporting Portal managed by the Ministry of Home Affairs.
The Indian Cyber Crime Coordination Centre, I4C, has stated that in May 2024, an average of 7,000 cybercrime complaints were filed every day.
India’s embrace of a digital way of life, including banking and the Unified Payments Interface – or UPI – have firmly placed it in the lead pack of technologically-enabled financial inclusion. But it has also left law enforcement agencies struggling to keep up with the rising number of crimes, and regulators rushing to improve financial literacy.
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In May 2024 alone, UPI crossed 14.04 billion transactions with a total value of Rs 20.45 lakh crore. We have cheap internet access and greater financial inclusion to thank for it. Providing the sobering note was a Bloomberg report based on Reserve Bank of India – or RBI – data that said digital payment frauds saw a more than a fivefold jump in the year ended March 2024. Digital payments, including cards and internet transactions, comprised 10.4% of the total fraud amount – that’s up from 1.1% in fiscal 2023.
Make no mistake about it, UPI is a gamechanger and a much-needed technology. Since its launch in 2016, it has transformed India’s payments landscape. The pace of its adoption has been staggering. One indicator of its effectiveness and popularity is that a significant share of the peer-to-merchants and peer-to-peer transactions routed through it are of less than Rs 2,000. However, accompanying this popularity is a sharp rise in fraud.
A vast section of the population is vulnerable due to a combination of financial illiteracy and the careless use of technology. Fraudsters, meanwhile, are getting more and more sophisticated even as financial institutions loosen controls in the battle for market share.
I4C data on the rising number of cases is telling.
- 2019: 26,049
- 2020: 257,777
- 2021: 452,414
- 2022: 966,790
- 2023: 15,56,218
- In the first four months of 2024: 740,957
This forced the government to think of introducing a minimum time threshold for first-time transactions between two individuals beyond a prescribed amount. This could mean a four-hour window for transactions above Rs 2,000. However, this could lead to disruptions because National Payments Corporation of India data showed that in October 2023, 22.5% of peer-to-peer transactions were above Rs 2,000.
Despite this, some government officials thought the move would be warranted if implemented. This is because fraudsters employ a range of techniques, from phishing and malware to SIM cloning. Other techniques include QR code scams and courier scams in which people are told drugs have been found in their consignments.
Even with UPI, fraudsters quickly devised ways to exploit consumers. The tactics range from fraudulent cashback offers to QR codes and spoofed virtual payment addresses for refunds and disaster support.
In 2022–23, UPI fraud cases exceeded 95,000, up from 84,000 in 2021–22, according to Ministry of Finance data.
Such frauds are a major threat to our payments ecosystem.
Fraudsters even create fake websites, luring people to invest in stocks or cryptocurrency. Groups on messengers such as Telegram and WhatsApp mass-invite consumers to make dodgy investments. Other tactics include fake customer support, cashback links or emails that install malware, screen mirroring or remote access apps. These applications enable unauthorised access to financial information.
India, of course, is not the only country witnessing a surge in digital fraud. A report by TransUnion said that, across the world, 4.6% of all digital transactions are thought to be fraudulent.
The problem is complex and therefore needs a multi-layered response. Players in the payments ecosystem must regularly upgrade their IT infrastructure and protocols to plug gaps and minimise vulnerabilities. Raising consumer awareness is critical and must include education about newer methods of frauds.
The awareness drives must focus in particular on senior citizens and the rural populace.
The RBI, alarmed at the situation, announced a dedicated platform to address digital payment frauds. The platform will enable network-level intelligence and real-time data sharing across the digital payments ecosystem. The RBI has also launched omni-channel public awareness campaigns, and is delivering digital finance training.
Here’s how you can protect yourself from financial fraud:
- Become more aware. Stay informed about scams and fraud tactics. The government and financial institutions regularly provide information about them
- Do not indiscriminately share personal or financial information. Verify the identity of anyone who asks for it. Your bank and other genuine organisations will never ask for your password or PIN. While on the subject, create strong and unique passwords for your accounts. Avoid easily guessable passwords like birthdays
- Enable two-factor authentication for an extra layer of security
- Ignore suspicious emails asking for personal or financial information
- Beware of callers claiming to be from banks or government agencies. Do not provide sensitive information to them
- Use up-to-date security software on your devices and avoid financial transactions on public wi-fi networks
- Check your bank statements regularly for suspicious activity
While there are regulatory systems in place, there is no substitute for an aware and vigilant consumer. Financial literacy is the key to protecting yourself, so make sure you are doing the needful. There can be no better investment of time and effort.
Thank you all for listening. Please visit allindiansmatter.in for more columns and audio podcasts. You can follow me on Twitter at @AshrafEngineer and @AllIndiansCount. Search for the All Indians Matter page on Facebook. On Instagram, the handle is @AllIndiansMatter. Email me at editor@allindiansmatter.in. Catch you again soon.
