India’s Surging Problem with Platform Fraud: ANew Frontier in Economic Crime

Introduction

According to PwC’s Global Economic Crime andFraud Survey 2022: India Insights, platform fraud is a major concern for Indian organizations, representing 57% of all fraud incidents. This article explores the surge in platform fraud and its implications for Indian businesses.

The Rise of Platform Fraud

The transition to remote work and digital transactions driven by the pandemic has led to a significant increase in platform fraud. The report, “Platforms: The New Frontier of Fraud in India,” revealed that 99% of fraud cases in the last 24 months took place on various platforms. These include social media, e-commerce, enterprise systems, financial transactions, media sharing, knowledge sharing, and services.

Motivations for Platform Fraud

The primary motivation for platform fraud is financial gain, but brand damage and competitive advantage are other reasons. The digital landscape, which includes increasingly targeted platforms like enterprise systems, financial transactions, and e-commerce sites, presents an attractive target for fraudsters.

Types of Platform Fraud

Transaction frauds accounted for 89% of all platform frauds, ranging from unauthorized digital purchases to identity theft and triangulation fraud. Payment fraud, particularly through credit cards and digital wallets, constituted 92% of customer fraud cases in India. Additionally, impersonation, authorized push payments, and application/lending fraud are other forms of platform fraud.

Internal Threats and Collusion

Internal perpetrators and collusion between them and external fraudsters accounted for 40% and 26% of platform fraud cases, respectively. This underscores the importance of stronger internal control measures to mitigate platform fraud.

Addressing the Platform Fraud Threat

Tackling the platform fraud menace necessitates a collaborative effort between executives and a comprehensive strategy that encompasses the entire organization. Executives should oversee the implementation of risk control policies, and leaders within the organization must manage the risk program.

Implementing a Fraud Strategy

Risk managers should design a strategy for identifying, assessing, and responding to fraud. This includes:

Implementing a monitoring program to detect anomalies
Staying informed about changes in online activity
Paying attention to media coverage, customer feedback, and watchdog sites
Social media monitoring to detect potential fraudulent activities

Preventing and Detecting Fraud

While purpose-built transaction monitoring systems and third-party audit reports are essential tools for preventing and detecting fraud, it’s critical to have a deep understanding of partners’ controls as well.

Conclusion

As the threat of platform fraud grows and becomes more sophisticated, it presents a significant challenge for Indian organizations. A proactive, comprehensive approach to managing the evolving risks is critical. Technology solutions like document verification and anomaly detection can be part of a robust fraud prevention and detection strategy.

About the Survey

PwC surveyed 111 organizations across India for the second edition of this series. These organizations spanned various industries, including technology, financial services, banking and capital markets, consumer products and retail, education, healthcare, hospitality and leisure, and industrial products and manufacturing.

About PwC

PwC is a global network of firms that builds trust and solves important problems for people, businesses, and societies. We’re present in 152 countries and have over 327,000 people committed to delivering quality in assurance, advisory, and tax services. For more information and to learn what matters to you, visit www.pwc.com.