1. INTRODUCTION

Internet has become an integral part of our daily life. While sitting in the comfort of our home, we can now easily connect with millions of people virtually across the globe. The Internet has completely revolutionised the way in which we communicate, make friends, share updates, play games, shop, watch movies or television series, and play music. India is one of the largest and fastest-growing markets for digital consumers today. 

It is estimated at present, that there are about 502.2 million smartphone users in India. According to a report issued by the India Brand Equity Foundation (IBEF), the Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second largest e-commerce market in the world by 2034. While the number of internet users in India is expected to surpass 829 million by 2021 from the current 574 million users, the digital transactions are expected to reach USD 100 billion mark by the end of this year. The precise reason behind this exponential growth of E-commerce with digital transactions on the rise can be attributed to factors such as – decreasing cost and increasing availability of smartphones and high-speed internet connectivity throughout India. 

For a smooth functioning of the e-commerce transactions, the financial services system in India has been considerably upgraded to digital mode. Online banking or internet banking has emerged as a new and convenient way of exercising financial services like transferring money, viewing bank account statements, paying necessity bills, using e-wallets to shop online and so on. But this rise in the use of devices connected with the internet and the convenience of online financial services has also increased the risk of our hard-earned money being duped by cyber criminals. 

2. NEXUS BETWEEN RISING DIGITAL PAYMENTS AND EVER INCREASING ONLINE FINANCIAL FRAUDS IN INIDA:

Even though constant endeavours have been made by the present government to rapidly boost digitization of financial payment systems in India through the introduction of various initiatives such as the National Payments Corporation of India (NPCI), RuPay,  National Financial Switch (NFS), National Automated Clearing House (NACH), Unified Payments Interface (UPI) and others, yet according to a recent Report released by the Reserve Bank of India, over the period of last 5 years, Indians continue to have a strong bias towards cash payments over digital payments or cashless transactions. Reason being that cash, like other forms of money, is used both as a means of payment and as a store of value in our country. Further, factors such as lack of familiarity with newer, alternative payment methods, delay in getting complaints resolved and security and privacy concerns remain the major reasons behind people’s reluctance to switch to online mode of financial services or digital payments. 

Nevertheless, particularly after the demonetisation of 500 and 1000 Rupees currency notes in 2016, statistics show that Payments are quickly expanding to take place through online payment mode in India. As per the latest data released by the National Payments Corp of India (NPCI), payments made through UPI alone in June 2020 this year has reached 1.34 billion in terms of volume with transactions worth nearly Rs 2.62 lakh crore. It can therefore be said that, the increase in number of smartphone users and greater access to internet connectivity have definitely ameliorated the switch from cash payments to cashless or digital payments in India. 

3. ONLINE FINANCIAL FRAUDS

According to the National Crime Records Bureau (NCRB), 37,817 complaints related to Cybercrimes such as Child Pornography (CP), Rape/Gang Rape (RGR), mobile crimes, social media crimes, online financial frauds, ransom ware, hacking, crypto currency crimes etc. have been registered in India through the National Cybercrime Reporting Portal (NCRP) till March 2020 this year, out of which 434 FIRs have been registered on the basis of these complaints so far. While it is true that the personal information we share over the internet during a commercial transaction or otherwise, the improper or lack of strict security mechanisms in place puts the safety of our sensitive data under a constant threat of its potential breach but it also bears a greater risk on our lives and makes us more prone to become victims of cybercrimes such as online identity theft, unauthorised transfer of funds, ransom ware etc. In April this year, sensitive data comprising personal information of about 7 million Indians which included scans of their Aadhar Cards and screenshots of their banking transactions, were allegedly leaked online. Although the allegation was denied by the Government later on, but if it is believed to be true then one cannot really decipher as to what extent the lives of these innocent 7 million Indian people could become vulnerable to potential online frauds, had the data been shared to potential terrorist groups or hackers online. 

With online transactions becoming the new normal these days because of the lockdown amidst the on-going Covid19 situation, phone frauds, especially through debit or credit cards and e-wallets like Paytm, Google Pay, etc. are also on the rise. It has been noticed that financial frauds involving mobile phones, e-wallets etc. are being carried out by cyber criminals by adopting different methods. For example, at times some cases involve the customer herself revealing the debit/credit card details, ATM pin, or OTPs and thereby become a victim of the online fraud, while few other cases of financial frauds have been committed wherein the customer didn’t have any fault of her own or wasn’t even aware about the transaction that took place without her notice.       

4. TYPES OF FINANCIAL CYBER CRIMES

Let us discuss some of the types of cybercrimes that lead to financial frauds online:-

1. SIM SWAP

Under SIM Swap, fraudsters manage to get a new SIM card issued against your registered mobile number through the mobile service provider. With the help of this new SIM card, they get One Time Password (OTP) alerts, required for making financial transactions through your bank account.

2. ONLINE TRANSACTIONAL FRAUDS

In Online Transactional Frauds, usually a person alleges that some unknown individual person or entity has withdrawn money or has made transactions through his/her credit/debit cards through online purchasing. In most of these cases purchasing is done by using following crucial information of the credit/debit card owner:

• The 16 Digit Credit/Debit Card Number;
• The validity/date of expiry of the Credit/Debit card;
• The 3 digit confidential Card Verification Value (CVV) or the One-Time-Password (OTP) sent on the registered mobile number of the Debit Card holder.

While it may be that the Card Number and the validity of the card is made available to the fraudsters through some insider of the bank in which the victim is operating his/her account, the OTP is procured by them by deceiving the account holder to share the OTP on the pretext that it is required for account verification, etc.

3. CHEATING SCAMS

In this type of online financial fraud, the victims normally complain that they have received emails from unknown sources wherein they have been informed that:

4. Either they have won a lottery worth millions of dollars; or
5. Their help is required for transferring of illegal money from some other country; or
6. They have been selected for an overseas job, generally a hotel job in some European/American/Gulf nation; or
7. Goods are offered at throwaway prices; or
8. In some cases, the victim’s address book in her emailing list is compromised and emails sent to all her contacts from her ID asking for money to bail out from a perilous situation;

The victims in these online cheating scams are then trapped in a phased manner and are generally made to deposit a huge amount of money either as money transfer fee, payment of taxes or transportation cost for travelling etc. Such crimes are generally carried out from foreign locations. Money is either deposited in offshore accounts or in some courier account in India.

4. INSURANCE FRAUDS

In this type of online fraud, hundreds of people fall in the trap of fake insurance calls. The fraudulent callers are increasingly ingenuous and appeal to our sense of fear and greed to part with personal details and money. Examples of such calls may include: 

“We are calling from Insurance Verification Department. Give your PAN Card number, Bank Details and Aadhaar number to complete the verification process.”

Or

“Your insurance policy is up for cancellation and your money will be transferred to your agent and LIC. Give personal details, policy details, and bank account details and secure code behind card to complete electronic transfer of money.”  

5. MONEY MULE

Money Mule is a term used to describe innocent victims who are duped by fraudsters into laundering stolen/illegal money via their bank account(s). When such incidents are reported, the money mule becomes the target of police investigations, due to their involvement.

6. PHISHING

Phishing is a type of fraud that involves stealing personal information such as Customer ID, IPIN, Credit/Debit Card number, Card expiry date, CVV number, etc. through emails that appear to be from a legitimate source. Nowadays, phishers also use phone (voice phishing) and SMS (Smishing). Fraudsters pose as Bank officials and send fake emails to customers, asking them to urgently verify or update their account information by clicking on a link in the email. Clicking on the link diverts the customer to a fake website that looks like the official Bank website – with a web form to fill in his/her personal information. Information so acquired is then used to conduct fraudulent transactions on the customer’s account.

7. SMISHING

Smishing is a type of fraud that uses mobile phone text messages to lure victims into calling back on a fraudulent phone number, visiting fraudulent websites or downloading malicious content via phone or web. In this type of cybercrime, Fraudsters send SMS intimating customers of prize money, lottery, and job offers etc. and requesting them to share their Card or Account credentials. Unaware, the customer’s follow instructions to visit a website call a phone number or download malicious content. Details thus shared with the person who initiated the SMS are then used to conduct fraudulent transactions on customer’s account, causing them financial loss.

8. VISHING

Vishing is one such attempt where fraudsters try to seek your personal information like Customer ID, Net Banking password, ATM PIN, OTP, Card expiry date, CVV etc. through a phone call. The fraudster poses as an employee from the bank or a Government / Financial institution and asks customers for their personal information. They cite varied reasons as to why they need this information. For e.g. reactivation of account, encashing of reward points, sending a new card, linking the Account with Aadhar, etc. These details thus obtained are then used to conduct fraudulent activities/ transactions on the customer’s account without their knowledge.

5. CONCLUSION:

With everything going online, we do leave behind our digital footprints everywhere. The Internet has made it possible for the transactions which were erstwhile limited to regions within closer proximity of a local area, have now become transnational all because of the e-commerce websites that are located and are operating on the World Wide Web. However, the e-commerce has also posed a major challenge on the law enforcement agencies to curb online financial frauds because of the borderless nature of these transactions; it becomes really difficult to find out the real mastermind behind such crimes. In addition, there are many kinds of cybercrimes that happen online and each requires a specialised investigative skill set and forensic tools to reveal the identity of the real culprit behind it. Hence, these factors remain as some of the pitfalls of trying to solve and tackle the crimes that takes place online and needs to be properly addressed by the appropriate authorities. But at the same time, it is also the duty of the citizens to be aware of their surroundings and take necessary steps to prevent them from becoming victims of online financial frauds. Hence, the in the next  article I have laid down 10 steps as to how to secure and prevent yourself from falling prey to cyber criminals and not become the victims of financial frauds that happen online.