Financial Crime World

Financial Frauds in India: A Staggering INR 30,000 Cr. Lost in 2023

In the financial year 2023, India faced documented bank frauds worth 30,250 crore ($3.87 billion) according to the Reserve Bank of India (RBI), marking a decline from the 1.3 trillion rupees ($17.5 billion) recorded in 2021 [1]. Despite this decrease, the gravity of the situation is far from diminished. The increasing trend of online fraud adds to citizens’ financial risks [2].

Increase in Online Fraud

India’s financial sector experienced a surge in sophisticated scams in 2023, taking advantage of emerging technologies and targeting unsuspecting individuals [3]. One notable scam involved the Unified Payments Interface (UPI), which saw fraudsters netting `71,000 crore ($9.3 billion) [3]. UPI scams employ deceitful tactics such as disguised collect requests as fraudulent cashback offers and QR codes for refunds [4].

Additionally, investment scams promising unrealistic returns increased dramatically. An example is a Chinese investment fraud that defrauded more than `712 crore ($930 million) from Indian investors [5]. Scammers often utilize Telegram and WhatsApp groups to lure victims, capitalizing on the increased interest in cryptocurrencies and stocks [6].

Banking System’s Fraud Cases

The banking system recorded 13,530 fraud cases during 2023, with 49% (6,659 cases) identified within the digital payment - card/internet category [7]. The RBI reported a total loss of approximately 4,69,000 crore ($61.1 billion) from all bank frauds between June 2014 and March 2023 [8].

With the escalating threat of financial fraud, it’s essential for individuals to understand common types of scams and protect themselves from falling victim:

UPI Scams: Stay Vigilant Against Disguised Cashback Offers and Spoofed VPAs

  1. Avoid becoming a victim of UPI scams by being cautious of disguised collect requests as fraudulent cashback offers and wary of spoofed VPAs used for refunds or disaster support [6].
  2. Regularly review your UPI transaction history and report any unauthorized or suspicious activities to your bank [4].

Credit Card and Digital Banking Frauds: Phishing Attacks and Stolen Card Details

  1. Be aware of phishing attacks, identity theft, and fraudulent transactions using stolen card details, which are common forms of credit card and digital banking frauds.
  2. Protect yourself by using a strong, unique password for your online banking account, enabling two-factor authentication, and being cautious of unsolicited phone calls and emails from banks or financial institutions [9].

Best Practices for Avoiding Financial Scams

  1. Stay informed: Educate yourself about common financial scams, fraud tactics, and legitimate financial institutions.
  2. Verify identities: Be cautious when sharing personal or financial information. Only share sensitive data with trusted organizations.
  3. Enable two-factor authentication for online accounts.
  4. Be wary of unsolicited emails, calls, or text messages.
  5. Use a strong, unique password for each online account.
  6. Be cautious when downloading apps, clicking on links, or installing software. Always verify the authenticity of sources.
  7. Regularly review bank and credit card statements for suspicious activity.
  8. Report any discrepancies or fraudulent activity to the bank and local police.

[Sources]

[1] - Business Today [2] - Microsoft News [3] - LiveMint [4] - Business Standard [5] - The Hindu [6] - The Print [7] - The Hindu Business Line [8] - The Hindu [9] - The Week