Tackling growing cyber financial frauds!

By M.Y.Siddiqui

Cyber crime is a reality and cyber financial fraud a harsher fact. According to the RBI annual report, the banking sector recorded 9,103 cases of frauds involving Rs. 60,414 crore in 2021-22 and 7,359 cases of fraud involving Rs.1, 38,211 crore in 2020-21. May 2023 saw a sudden surge in bank fraud/internet banking fraud cases. Thousands of people get scammed daily and lose money to Internet banking fraud or mobile banking fraud. Modus operandi involving scammers, generally, include calls to bank customers pretending to be authorized representative of the bank to extract personal details from them. Despite RBI guidelines to not share OTPs, many people continue to fall prey to such scams, indicating lack of awareness among customers and potential breach of security/data compromise by banks. Social media continue to host fake accounts that facilitate such scams.

Before going into details to stop such scams, one should understand first what cyber crimes are. Different types of cyber crimes and punishments for the same are provided for in the Information Technology Act, 2000 as amended to date and Indian Penal Code, 1860. Cyber crimes are acts that violate the law and are perpetrated using information and communication technology to target networks systems, data, websites and technology to facilitate a crime. Cyber crime is different, as it knows no physical or geographical boundaries. To report a cyber financial or cyber crime, a complaint online with the National Cyber Crime Reporting Portal at http://cybercrime.gov.in may be lodged. Complaint is easy to file and free of cost. Complaint may be filed the same day of the incident and immediately.

Complainant or victim is required to select the type of financial fraud committed from the drop-down menu like mobile banking fraud, social media fraud etc. Thereafter, complainant is called upon to provide personal details like name, email address, phone number, residential address, furnishing relevant evidence with photos, screenshots, together with a draft and uploading explaining details of complaints. Complainant is also required to upload identity proof, Aadhar card, PAN card. Added to that cyber crime helpline number 1930 may be called to report the crime. A complaint can be registered on call and complainant thereafter will receive a link to complete the application on the Cyber Crime Portal.

Complainant may also register complaint the same day. Per RBI’s limited liability policy, banks must ask their customers to register mandatorily for SMS alerts and wherever available register for email alerts for electronic banking transactions. In addition, the customers must notify any unauthorized electronic banking transaction at the earliest after the incident. Longer the time taken to notify the bank, higher will be the risks of loss to the bank and customer. Complaint may also be registered with the RBI. Per RBI policy, crime must be reported within three days of the incident. In case of finding fake accounts, social media handles of such scammers; a take down complaint may be filed or reported about that account on that portal. Besides, a complaint may be filed in the Consumer Forum in terms of the Consumers Protection Act, 1986, as it is the right authority to deal with such cases.

It is important   to note that in case of a net banking fraud, a customer shall have zero liability where the unauthorized transaction occurs, in contributory fraud, negligence, deficiency on the part of the bank, irrespective of the transaction is reported by the customer. Third party breach where the deficiency lies neither with the bank nor with the customer but elsewhere in the system, and the customer notifies the bank within three working days of receiving communication from the bank regarding the unauthorized transaction. However, a customer shall be liable for the loss caused by unauthorized transactions in the cases where the loss is due to negligence by a customer having shared the payment credentials. In such case, the customer will bear the entire loss until the unauthorized transaction is reported by the affected customers to the bank, where the responsibility for the unauthorized electronic banking transaction lies neither with the bank nor with the customer, but elsewhere in the system and when there is delay of four to seven working days after receiving the communication from the bank on the part of the customer in notifying the bank of such a transaction, the per transaction liability of the customer shall be limited to the transaction value or the amount mentioned in the limited liability policy, whichever is less.

It is unfortunate that despite such mechanism in place to report cyber crime, few people actually get relief. In a recent survey conducted by Local Circles, around 39 per cent of families reported having experienced financial fraud in the last three years and only 24 per cent of them got their funds back. The Survey revealed that 13 per cent were defrauded by websites taking money for products that were not delivered. Ten per cent were ATM card frauds; another 10 per cent were bank account frauds and 16 percent other frauds. Only 24 per cent of 11,305 respondents reported that they were able to get back their funds while 70 per cent could not get any relief from their complaints. The data revealed 18 per cent filed a

complaint with the designated platform or entity and got back the money while six per cent filed a complaint with authorities and got back the funds. However, 41 per cent indicated that the matter was still pending, 17 percent felt helpless as they were nowhere to go. Twelve per cent of those surveyed admitted that they decided not to file a complaint and six per cent gave no clear response.

One can only imagine the miserable plight of victims of even graver cyber crimes where victims are black mailed, hooked and their individual credentials, personal dignity etc. are defiled/destroyed irretrievably and several others driven to the stone wall leaving them for suicide or self-destruction!   

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