FY24 proved to be an unprecedented year, surpassing the last three years in the number of incidents and the value of money lost to these frauds.
FY24 proved to be an unprecedented year, surpassing the last three years in the number of incidents and the value of money lost to these frauds.
As per RBI’s response to an RTI application filed by The Hindu, cyber fraud cases have skyrocketed, from 75,800 incidents in FY23 to a staggering 2,92,800 in FY24.
Similarly, the financial loss from these cyber fraud cases ballooned nearly fivefold, from ₹421.4 crore in FY23 to ₹2,054.6 crore in FY24.
When it comes to the banks most affected, the RTI reply showed that Kotak Mahindra Bank, Axis Bank, State Bank of India, HDFC Bank, and ICICI Bank consistently reported the highest share of fraud cases in the past five years. Together, these five banks accounted for 62% of the total value of frauds reported and 53% of all cases during this period.
Geographically, Maharashtra tops the list, accounting for over one-fourth of the total amount lost to cyber fraud. This can largely be attributed to Mumbai, the country’s commercial hub, which witnesses a high volume of online transactions. A close second is Tamil Nadu, representing 23% of the total value lost, followed by Delhi, Haryana and other states.
In a discussion with CNBC-TV18, Prashant Mehra from HDFC Bank, Vikram Babbar from EY, and Pratyusha Vemuri from RaptorX AI shed light on prevalent fraud types like phishing and digital arrest scams. They stressed the need to maintain digital hygiene, adopt secure practices, and promptly report fraudulent activities to reduce risks.
This is the verbatim transcript of the interview.
Q: Millions of Indians fall victim to these kinds of fraud each year. Just highlight the most common types of fraud people fall victim to and what they should be aware of.
Babbar: Digital fraud has increased significantly in the last few years, and much of that has to do with how we use digital transactions and how the digital trend has increased in India post-COVID. From a fraud perspective, we have identified two key areas that customers fall prey to.
The first is where there is important information that the fraudster believes the customer has done or has not done. Take digital arrests, for example. A customer is told they have carried out a transaction which is now part of a money laundering investigation. The customer starts believing this. It’s about falling prey to something that you think that you have done, and it’s part of a larger racket.
The second is that fraudsters lure their victims by convincing them they stand to benefit, such as clicking on certain links that promise them certain benefits and getting scammed.
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Q: At HDFC Bank, you would have had first-hand experience of some of the most common types of fraud happening repeatedly. What are the most common ones you have seen?
Mehra: We have analysed and observed two aspects customers are vulnerable to. Greed, for one — doubling their money by clicking on a link, trading scams, or rewards and cashback offers on credit cards. These tempt the customer to act in haste and click on something.
The second is fear. There is a threat or a menacing undertone to messages that say if you don’t click on a link now, if your KYC details are not updated, then your account would be blocked. Here, fraudsters are playing with customers’ emotions and getting them to act in haste.
What we have been doing at the bank is communicating to customers that should any such message come, think before you act — there’s absolutely no need to act in haste because it’s that haste that causes them to share confidential or critical information which fraudsters exploit.
Q: But if you were to put it down to the three biggest mistakes customers make that make them fall victim to these frauds, giving OTP is a common one. Could you highlight some of the other risks?
Mehra: The payment ecosystem has evolved, and many customers have embraced digital adoption on mobile phones to carry out banking or e-commerce transactions. However, the concept of digital hygiene in a customer is yet lacking. They are unaware of the secure practices that we should follow. Should we download just about any app on our mobile device? There could be malware, and there could be a malicious website that they visit. I call them sleeper cells capturing secret information; maybe that information is going somewhere.
The other is extracting that information from these customers through social engineering, such as making a phone call and convincing a customer to share sensitive information.
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Q: Give us a sense of what some of these tools hackers use to defraud people are, and what are some of the tools that are available to the common man to protect themselves?
Vemuri: I am building a company called RaptorX, which helps banks and e-commerce companies prevent money laundering and mule accounts. We help with transaction monitoring, and all the issues mentioned here by the panel so far are from the banking side. To prevent fraud, customers also have to be educated because they are prone to greed or susceptible to fear.
What the fraudsters use is, for example, KYC is very readily available in India. I have seen—at banks and other locations—people writing down their Aadhaar numbers, which then float around. Fraudsters use them to create a mule account. People don’t realise the sensitivity of KYC information, which should be the first priority.
The second is going to fake websites or downloading apps not verified by the Google Play Store or Apple App Store. These links are usually sent over WhatsApp. So users should not click on them. Website security awareness has to be spread. People don’t look at that, too. Again, there is greed, UPI fraud, SIM swaps, etc. Many people have not enabled their Aadhaar biometrics. They have not locked their Aadhaar, and that is why a lot of Aadhar-based Payment System frauds are happening as well right now.
Watch the accompanying video for more.
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