Common Financial Frauds in Indian Banking and Fintech, 2024

The Indian banking and fintech system, while offering incredible convenience, is unfortunately susceptible to various types of financial fraud. Here are some of the most common ones:

1. Online Financial Fraud:

• Phishing: This involves criminals sending fake emails or messages that appear to be from legitimate institutions, tricking users into revealing their login credentials or personal information.
• Malware Attacks: Malicious software can be installed on your device to steal your banking credentials or track your online activity.
• Skimming: This involves using devices to steal credit card information from ATMs or point-of-sale terminals.
• Card Cloning: Stolen credit card information can be used to create counterfeit cards for fraudulent transactions.

2. Mobile Banking Fraud:

• SIM Swapping: Criminals can trick telecom providers into transferring your SIM card to their phone, gaining access to your mobile banking apps and OTPs.
• App Cloning: Fake mobile banking apps are created and distributed to steal user credentials and financial data.
• SMS Spoofing: Fraudsters send fake SMS messages that appear to be from your bank, asking for sensitive information or directing you to malicious websites.

3. ATM Fraud:

• Card Trapping: A device is inserted into the ATM’s card slot to trap your card, allowing the criminal to access your account.
• Shoulder Surfing: Criminals observe people entering their PIN at ATMs to steal their information.
• Skimming: Similar to online skimming, devices are attached to ATMs to steal credit card information.

4. Loan Fraud:

• Identity Theft: Criminals steal someone’s identity to apply for loans and credit cards in their name.
• Loan Application Fraud: False information is provided on loan applications to secure loans that wouldn’t otherwise be approved.
• Loan Defrauding: Borrowers default on their loans intentionally or through fraudulent means.

5. Payment Gateway Fraud:

• Card-Not-Present (CNP) Fraud: This involves using stolen credit card information to make online purchases without the cardholder’s knowledge.
• Merchant Fraud: Dishonest merchants may manipulate payment systems to overcharge customers or process unauthorized transactions.

6. Fintech Platform Fraud:

• Fake Platforms: Fraudulent fintech platforms are created to lure users into sharing their financial information or investing in non-existent schemes.
• Data Breaches: Fintech platforms can be vulnerable to data breaches, exposing user information to criminals.

7. Investment Fraud:

• Ponzi Schemes: These involve promising high returns on investments, but the money is actually used to pay earlier investors, leading to a collapse.
• Pyramid Schemes: Similar to Ponzi schemes, these rely on recruiting new members to generate profits, rather than legitimate investments.

8. Insurance Fraud:

• Fake Claims: Individuals may file false insurance claims to receive payouts for non-existent losses.
• Staging Accidents: Criminals may stage accidents to claim insurance benefits.

9. Money Laundering:

• Placement: Illegal funds are deposited into legitimate accounts to disguise their origin.
• Layering: Funds are moved through multiple accounts and transactions to obfuscate their trail.
• Integration: The laundered funds are re-introduced into the legitimate economy.

Understanding these common fraud types is essential for individuals and businesses to implement preventive measures and report suspicious activities promptly.

Also Read: What is CFCFRMS? Citizen Financial Cyber Fraud Reporting and Management System

Haryana Police Retrieve Rs 70 Lakh in Cyber Fraud Case Targeting HR Executive