Common Financial Frauds In India: How To Stay Safe

Financial scams in India have been a recurring concern, impacting individuals and the economy. These scams often involve fraudulent schemes, manipulation of financial systems, or deceptive practices that exploit unsuspecting investors and consumers.

The aftermath of such scams not only results in financial losses for victims but also erodes trust in the financial system. In 2023, India saw bank frauds totaling 302.5 billion rupees, a drop from 1.3 trillion in 2021, as per Forbes. Although a positive shift, citizens still need caution. A study revealed 69% of online fraud cases in 2021 and data from the RBI showed scams amounted to Rs 60,414 crore in 2021-2022, underlining the challenges of financial scams in India. 

The financial landscape is grappling with a diverse array of fraudulent activities, such as:

UPI Scam Update:

The rise of UPI transactions brought convenience but also attracted fraudsters. UPI-related frauds pose a substantial threat, with reported cases exceeding 95,000 in the fiscal year 2022–2023. A staggering 55% of all digital payment frauds are associated with UPI transactions. Identity-related frauds, particularly account-related scams, dominate, constituting 65% of all financial frauds in 2021.

Prevention: Avoid clicking on unsolicited links or responding to unknown messages. Verify UPI transactions carefully, double-checking details before approving.

Digital Banking and Credit Card Frauds:

Digital transactions' popularity led to a surge in online banking and credit card frauds. In the fiscal year 2023, the banking system recorded 13,530 fraud cases, with nearly 49% falling under the digital payment – card/internet – category.

Prevention: Regularly monitor bank statements, enable transaction alerts, and never share OTPs or sensitive information. Install reputable antivirus software to protect against online threats.

Bank Frauds' Overview:

Bank frauds, encompassing loan frauds and unauthorised transactions, saw a decline in 2023. However, between 2014 and 2023, Indian banks detected approximately 65,017 frauds, resulting in a staggering loss of Rs 4.69 lakh crore.

Prevention: Be cautious of unsolicited communication, regularly update passwords, and enable multi-factor authentication for online banking. Verify the legitimacy of financial institutions before making significant transactions.

QR Code Scam Alert:

QR code scams are on the rise, particularly in Bengaluru, where 41% of reported cybercrime incidents were attributed to QR code scams. Incidents related to QR code frauds escalated between 2017 and May 2023, indicating an evolving form of cybercrime.

Prevention: Only scan QR codes from trusted sources. Be wary of unsolicited QR codes received through messages or emails. Regularly update mobile security software.

Investment Scam Warning:

Fraudulent investment schemes continue to lure individuals with promises of unrealistic returns. A massive Rs 712 crore Chinese investment fraud exposed in Hyderabad serves as a stark reminder of the risks associated with such scams.

Prevention: Conduct thorough research on investment opportunities, verify company credentials, and be sceptical of schemes promising unrealistic returns. Consult with financial advisors before making significant investments.

Part-time Job Scam Alert:

Online scammers exploit individuals with promises of easy part-time work. As of April 30, 2023, the Delhi police received 467 complaints, showcasing a significant increase from the 32 complaints reported in 2020.

Prevention: Research and verify the legitimacy of job offers. Avoid sharing personal or financial information with unknown entities. Use reputable job portals and be cautious of high-paying part-time jobs that seem too good to be true.

Courier Scam Advisory:

A new courier scam targeting young individuals has emerged, with 163 recorded instances in Bengaluru in 2023. The scam preys on fears of recipients, emphasising the importance of verifying unexpected communications from courier services.

Prevention: Verify unexpected communication from courier services directly. Do not share personal information or make financial transactions without thorough verification. Be cautious of unsolicited calls claiming to be from courier companies.

Malware Warning:

Fraudsters use deceptive tactics to convince consumers to install malware, compromising devices and gaining unauthorised access to financial information. Cybercrimes on digital platforms constitute approximately 57% of all fraud incidents in India, emphasising the critical need for heightened cybersecurity measures.

Prevention: Install reputable antivirus and anti-malware software. Avoid clicking on suspicious links, especially those received through emails or messages. Regularly update device software for enhanced security.

As financial scams continue to evolve, vigilance, caution, and thorough verification are required for people to protect themselves from falling victim to these malicious activities.