March 18 – India’s consumers and businesses engage in more digital transactions – to pay for parking or cigarettes or even peanuts in pushcarts – than those of any other country, giving a boost to its fast-growing economy. But scams and fraud schemes are also on the rise as security infrastructure and regulations lag, potentially tripping up India’s digital economy. That’s our focus this week.
STREET VENDORS GO DIGITAL
Indian street vendors, parking lot attendants and – according to media reports – even beggars with QR codes are taking digital payments, sometimes for as little as 10 or 20 rupees, making India number one globally in the sheer number of digital transactions.
The finance ministry has praised the rise of digital payments for enhancing economic opportunities and financial inclusion, while the central bank has labelled it the “growth engine of tomorrow”.
But headlines last week cast the spotlight on an uglier side of this transformation: runaway digital financial crime.
Digital scams are on the rise, including the case of an Indian textile baron who lost $830,000 last year after fraudsters summoned him to an online hearing at a fake Supreme Court that threatened him with jail.
The finance ministry told parliament last week that the number of high-value cyber fraud cases in the latest full fiscal year was more than four times the number the year before, while a central bank report said total digital payment fraud amounted to $175 million in the same period.
Also among the news headlines last week: India brought home nearly 550 people who had been lured with fake job offers to “scam centres” in Myanmar and other Southeast Asian countries, where they were made to engage in financial cybercrime. Hundreds more are still waiting to return.
This, ironically, coincided with the central bank’s fifth annual “Digital Payment Awareness” week, held to promote safer online payments in the world’s fastest-growing major economy.
FAKE CODES, FAKE COURTS
It is a rare day in India these days when there is no media report or social media post about people duped by a digital scam.In the early days of scamming, smartphone users were deceived by fraudulent payment codes that they were told would pay into their bank accounts, but that took money out instead.
Now, with the use of AI and spoofing software, scammers have been creating fake police stations and even the fake court hearing that defrauded the textile tycoon, or using the voice of relatives to dupe victims.
Financial and tech analysts blame poor cyber literacy, digital security loopholes, sophisticated AI-driven phishing attacks and deepfake scams for the rise in digital financial fraud.
“The golden age of cybercrime is here — where AI, the dark web, and rampant data exposure fuel financial fraud at an unprecedented scale,” cyberlaw expert Pavan Duggal was quoted as saying in a November 2024 report by the Indian Cyber Crime Coordination Center.
