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Even as digital payments continue to gain prominence in India, with most Indians resorting to Gpay, Phonepe and other apps, the financial fraud encountered has also risen. A survey conducted by private firms LocalCircles, has shown that 42% of Indians surveyed experienced financial fraud in the last 3 years, and 74% of those who experienced it failed to get the money back.

The LocalCircles survey that was conducted in October 2021 revealed that 29% of citizens share their ATM or debit card pin details with close family members, while 4% share them with their domestic and office staff. The survey also revealed that 33% of citizens store their bank account, debit or credit card and ATM passwords, Aadhaar and PAN numbers on email or computer, while 11% keep them in their mobile phone contact list.

According to the Microsoft 2021 Global Tech Support Scam Research report, consumers in India experienced a fairly high rate of online fraud of 69% in 2021.

The Reserve Bank of India (RBI) data, which might miss a lot of unreported frauds, shows that frauds to the tune of 60,414 crore were witnessed in 2021-22. “Collectively, the bank frauds have resulted in India losing at least 100 crore every day over the past 7 years," reported RBI.

These financial frauds, as per the central bank, have been classified as misappropriation and criminal breach of trust, fraudulent encashment through forged instruments, manipulation of books of account, fictitious accounts and conversion of property, unauthorised credit facilities extended as reward for illegal gratification, negligence and cash shortages, cheating and forgery, irregularities in foreign exchange transactions and any other type of fraud not coming under any of the specific heads mentioned.

The survey also revealed that bank account fraud, fraud by fly-by-night eCommerce operators, credit and debit card frauds account for most incidents in the last 3 years. To the question on the nature of the financial frauds experienced in the last 3 years, 29% respondents to the survey said ‘Bank account fraud’, 24% said ‘Fraud by eCommerce sites’, and 21% said ‘Other frauds’. Breaking down the poll, 18% said “Credit/debit card fraud", 12% said “Fraud by mobile apps", 8% said “ATM card fraud", and 6% said “Insurance fraud", while 3% did not respond. The survey showed that bank account fraud, fraud by fly-by-night eCommerce operators, credit and debit card frauds are major causes of the problem.

The RBI has been advising citizens to report any financial frauds they have experienced. To safeguard against such financial losses, experts have been advocating the use of alpha-numeric password lock for email, computer and mobile phones, in such a way that is difficult to crack. Importantly, at random intervals, one should change the account password used for making transactions. Banks need to make more efforts to promote financial literacy in various Indian languages.

Citizens on the LocalCircles platform also suggested that the government, along with RBI, should organise awareness programmes on the risk of financial fraud, and how the theft of financial information takes place and what all needs to be protected. Similarly, there is an urgent need to fix the redressal processes when consumers approach their bank or financial institution. If only 17% who faced financial fraud were able to get their funds back, it clearly indicates that even for those who complain, only 1 in 6 are likely to find the redressal and that too after many follow ups and a long time.

Similarly, the policing system, which is the first complaint point for a large majority of Indians is just not sensitised to handle such issues or even provide guidance.

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