Banking Central, Digital Frauds — Where Does The Buck Stop?

Banking Central, Digital Frauds — Where Does The Buck Stop?

Everyone wants to bank safely. Instances of frauds involving their hard-earned money destroy the customer trust in banking channels. I have a neighbor who was tricked by a fraudster last year and ended up sharing his secret PIN number to authorize payment through a fake website.

The victim couldn’t make out the minute differences of the fake website with that of the original and, alas!, the secret PIN was no longer a secret one anymore. His money was lost, the neighbor refuses to use any online digital banking channels since then and prefers the brick and mortar branches.

Even the informed, highly educated customers too fall for fraud. In October last year, a retired bank manager was duped of Rs 3 lakh by a cyber fraudster who impersonated a mobile network service company’s executive on phone and tricked him into revealing his bank details.

About three weeks ago, a 48-year-old woman working as a manager with a nationalised bank fell victim to the online KYC (know your customer) update fraud and lost Rs 60,000. So, the frauds are not only something that concerns the layman, even bank managers who are supposed to guide customers about fraudulent transactions are falling prey to the same type of fraud. So what do these instances suggest? Despite the attempts from the Reserve Bank of India (RBI) and banking institutions, there is still a worrying gap, a lack of awareness among different segments about various types of KYC frauds.

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And, unfortunately, the fraudsters are always ahead in the game. Last week, some users of the Dhani Loans and Services app started complaining about unknown parties misusing their PAN card details to seek loans on the platform. Alleging that their PAN card details were used by unknown people to avail loans via Dhani, some have complained that they are facing show-cause notices by collection agents for loans they never took.

Complainants added that their credit scores have also been impacted, as credit reports have listed loans they had never availed as defaults. The indications point to data theft and financial fraud. Essentially, the case here is that fake loans were generated by perpetrators, which is a serious charge.

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On non-repayment of such loans, the collection agents start harassing the actual owners of the PAN cards, which is when the fraud actually comes to light. Among the affected parties include actor Sunny Leone who alleged identity theft to initiate a fake loan.

The company has admitted the problem and has promised action. But, this event is yet another example of rising digital fraud. According to a report by global information and insights company TransUnion, the share of suspected fraudulent digital transaction attempts originating from India increased 28.32 percent over the 12 months ending March 2021 compared with the previous 12 months.

In India, across industries, TransUnion found that the highest share of suspected digital fraudulent transactions originated from Mumbai, Delhi and Chennai. Separately, software firm ACI Worldwide said in a report that globally, card-related fraud accounts for the largest number in terms of reported incidents from consumers, but fraud incidents associated with real-time payments were on the rise from 2019 to 2020 as fraudsters began to target new channels.

It is proven already that what we are doing already isn’t enough to prevent fraud in the financial system. There needs to be a major awareness drive/campaign at the grassroots level to sensitise the common man (also the bank employees) about various frauds and how not to get into the pitfalls. This can be achieved with coordinated action among the regulators, the banking entities and the government.