The growing menace

Cybercrime is one of the fastest growing crime types in the world with money worth hundreds of millions lost each year. The younger generation should all the more be cautious with the rampant use of cell phones, computers and the Internet, opening new avenues of frauds and scams in every segment of life. Digitisation efforts worldwide have fanned a lot of cybercrime, inflicting permanent and life-changing consequences for those affected. Yet, fraud continues to be treated as a low-priority crime, a victimless crime, or a crime that doesn’t cause the harm recognised in other types of crime. Being targeted by fraudsters can be distressing while sorting it out can be time-consuming, and the crime can have a direct impact on your personal finances — affecting your credit record and making it difficult to successfully apply for credit cards, loans or mortgages. New technologies often mean a wider surface area for attack. In other words, the sheer amount of technology in use is making us more and more vulnerable.

According to a recent Reserve Bank of India (RBI) report, the number of fraud cases in the banking sector increased by nearly 300 per cent in the last two years to 36,075 cases in the financial year 2023-24 (FY24). In contrast to the increasing number of fraud cases, the amount involved in fraud fell to Rs 13,930 crore in FY24 from Rs 45,358 crore in FY22. Digital payment frauds in India saw a more than five-fold jump to Rs 14.57 billion (Rs 1,457 crore) in the year that ended in March 2024 as compared to the previous period, media reports highlighted quoting the RBI statistics. Financial markets serve as the backbone of an economy — acting as a catalyst to facilitate capital allocation and wealth creation. However, amidst the allure of profit and promise, there lurks a demon — scams. India, with its burgeoning investor base and rapid digitalisation, presents a fertile ground for financial fraudsters to dominate. According to the central bank’s report, 67 per cent of fraud cases reported in FY24 were from private sector banks while 75 per cent of the total fraud amount was reported by public sector banks. The percentage of fraud amount reported by private lenders was 22.8 per cent in FY24.

The annual report also highlighted the significant rise in online fraud cases over the last two years. The report stated that online fraud cases increased by 708 per cent in the last two years to 29,082. The rising number of fraud cases coincides with increased fraud amounts via Internet banking/cards. In two years, the amount of money duped by fraudsters online increased by 145 per cent to Rs 1,457 crore. The growing number of fraud cases highlights the need for the central bank to increase regulation in the area. A major roadblock identified by the RBI in tackling the rising number of fraud cases was a significant time lag in the detection of fraud cases. The analysis of the vintage of frauds reported during FY23 and FY24 highlighted a significant gap between the date of occurrence of fraud and its detection. “Frauds have occurred predominantly in the category of digital payments (card/internet), in terms of number. In terms of value, frauds have been reported primarily in the loan portfolio (advances category),” the Annual Report for 2023-24 described.

Fraudsters are very good at using trends to change their tactics, and at the moment the cost of living crisis is particularly hot. There has been an increase in criminals posing as energy companies claiming to offer a better deal or as supermarkets offering money-off vouchers. Investment scams target those who need to supplement their income. Fraudsters pose as legitimate firms asking the victim to share their computer screen using remote access so they can harvest personal and financial data. They have also been posing as network providers asking for details of your existing contract in order to offer a better deal. Once they have these details, they can order devices in your name.

Fraudsters will also try to make you move money quickly by pretending your cash is at risk or that you are about to miss out on a once-in-a-lifetime opportunity. They create a sense of urgency, authority and scarcity to put pressure on victims. Their schemes often work because we are distracted, for example on the school run or at work. Taking your time to reread a message can help you spot a potential scam: a fraudulent text may include spelling mistakes while an email may be from a slightly different address to that of a legitimate person or company.

Your bank will never call you to ask you to move money into a new account so resist any pressure from a caller to do so. If sky-high investment returns advertised on social media seem too good to be true, they probably are. There is always time to look into a company before you trust it with any of your cash. Several firms these days have checker tools to help you quickly find out whether a page is likely to be legitimate. An old trend has been fraudsters pretending to be family members on WhatsApp and asking to borrow money. If you get a message like this, instead of transferring the cash, you can check whether it is genuine by taking the time to contact the actual family member via another channel. Do not click on links in texts or emails, even if the message appears to come from a company or person you trust. Unfortunately, there are always new scams to be aware of as con artists regularly update their tactics to trick victims.

Fraudsters often latch on to current affairs. Reports indicate that there has been an increase in scams associated with the cost of living crisis. You should also ignore any messages you are sent via text or email asking you to click on a link, even if it is not a scam you recognise until you are sure it is legitimate. Fraudsters overriding caller IDs are not uncommon. So, even if you get a call from a number you recognise, it cannot necessarily be trusted. Number spoofing also allows fraudsters to take over text chains with your bank or other financial institutions. If you were not expecting a call from your bank and cannot be 100 per cent sure who you are speaking to, hang up immediately and find the official phone number to call them back.

Similarly, if anyone ever asks you for money over text or email, or tells you their payment details have changed, even if it is someone you know, you should call them on a trusted number before going ahead with a payment. It has been witnessed that far from stemming the tide of fraud, the wave of social media scams impacting consumers only continues to grow. Research has also shown that more than two-thirds of online shopping scams start on Facebook. Yet it remains far too easy for criminals to set up fake profiles and advertise items that simply don’t exist, with no secure payment method offered to buyers. Therefore, it’s the need of the hour for tech and social media companies to take responsibility for protecting their own customers, stopping scams at source and contributing to refunds when their platforms are used to defraud innocent victims.

Views expressed are personal