RBI Releases Booklet on Modus Operandi of Financial Frauds
The Reserve Bank of India has published a booklet titled BE(A)WARE – Be Aware and Beware! To educate the customers on how to remain safe from fraudsters while carrying out financial transactions.
The Central bank in its booklet has written extensively about the common modus operandi used by fraudsters and precautions to be taken while carrying out various financial transactions. You can read the entire content of the RBI awareness booklet here: ( The Link is also given at the bottom ).
RBI claims that this booklet, which has been compiled from various incidents of frauds reported as also from complaints received at the offices of RBI Ombudsmen, provides information to those who are inexperienced, or not so experienced, in digital and electronic modes of financial transactions.
RBI’s Ombudsmen Offices and the Consumer Education and Protection Cells (CEPCs) also revealed that sharing of confidential information by the customers, knowingly or unknowingly, is one of the major causes leading to financial fraud.
The booklet gives information on the common modus operandi used by fraudsters and precautions to be taken while carrying out various financial transactions.
The book is further divided into three parts -- Part A provides information of commonly observed modus operandi; Part B suggests precautions to be taken against fraudulent transactions relating to banks and non-banking financial companies (NBFCs); and Part C explains the general precautions and digital hygiene to be followed by the public.
RBI’s booklet also emphasises one’s need for keeping their personal information confidential at all times and being mindful of unknown calls/emails/messages. It also outlines the due diligence measures to be followed while undertaking financial transactions.
It aims to enhance public awareness about various types of financial frauds perpetrated on gullible customers while carrying out digital payments and other financial transactions.
“The surge in the digital modes of payments witnessed in the past few years gained further momentum during the Covid-19 induced lockdowns. Digital payments enhance customer convenience by improving ease of doing financial transactions.
“They also contribute to promotion of financial inclusion. However, fraudsters are finding new ways to defraud the gullible public through various ingenious methods,” according to a RBI statement.
The booklet elaborates on safeguards against commonly used fraudulent techniques, such as, SIM swaps, vishing/phishing links, lottery, etc., including fake loan websites and digital apps.
It also gives details of the commonly observed modus operandi and precautions to be taken against fraudulent transactions relating to banks and non- banking financial companies (NBFCs), respectively.
“The booklet explains the general precautions and digital hygiene to be followed by the public…The booklet emphasises the need for keeping one’s personal information confidential at all times, being mindful of unknown calls / emails / messages, etc., and also outlines the due diligence measures to be followed while undertaking financial transactions,” RBI said.
During the COVID-19-induced lockdowns, digital modes of payments have seen a lot of traction. Customers benefit from digital payments because they make financial transactions easier. However, this also invited many fraudsters to make use of gaps and dupe the customers in different ways.
1. How do Phishing hacks work?
Fraudsters create a phishing website that appears to be a legitimate website such as a bank's website, an e-commerce website, a search engine, and so on. Fraudsters distribute links to these websites by SMS, social media, email, and Instant Messenger, among other methods. Many clients click on the link without first checking the Uniform Resource Locator (URL) and enter security credentials such as a Personal Identification Number (PIN), One Time Password (OTP), Password, and so on, which are collected and utilised by fraudsters.
2. How does Vishing work?
Imposters acting as bankers, firm executives, insurance agents, government officials, and others call or approach customers over the phone or over social media. Imposters disclose a few consumer facts, such as the customer's name or date of birth, to win trust. Imposters may pressure or trick customers into sharing confidential information such as passwords, OTPs, PINs, and Card Verification Values (CVVs) by citing an urgency / emergency such as the need to block an unauthorised transaction, payment required to avoid a penalty, or an attractive discount, among other things. Customers are then defrauded using these credentials.
3. Frauds using online sales platforms
On online sales platforms, fraudsters pose as purchasers and express an interest in the seller's product(s). Several fraudsters pose as defence personnel stationed in remote regions to gain trust. Instead of paying the seller, they use the Unified Payments Interface (UPI) app's "request money" option and demand that the seller authorise the request by entering the UPI PIN. Money is transferred to the fraudster's account whenever the seller inputs the PIN.
4. Frauds due to the use of unknown/unverified mobile apps
According to RBI, fraudsters circulate through SMS, email, social media, Instant Messenger, etc., certain app links, masked to appear similar to the existing apps of authorised entities. Fraudsters trick the customer to click on such links which results in downloading of unknown / unverified apps on the customer’s mobile, laptop, desktop, etc., Once the malicious application is downloaded, the fraudster gains complete access to the customer’s device. These include confidential details stored on the device and messages / OTPs received before / after installation of such apps.
5. ATM card skimming
Skimming devices are installed in ATM machines by fraudsters who take data from the customer's card. According to the RBI release, “Fraudsters may also install a dummy keypad or a small / pinhole camera, well-hidden from plain sight to capture ATM PIN. Sometimes, fraudsters pretending to be other customer standing near-by gain access to the PIN when the customer enters it in an ATM machine.
This data is then used to create a duplicate card and withdraw money from the customer’s account.”
6. Frauds using screen sharing app / Remote access
RBI warns customers stating the procedure that “Fraudsters trick the customer to download a screen-sharing app. using such an app, the fraudsters can watch/control the customer’s mobile / laptop and gain access to the financial credentials of the customer. Fraudsters use this information to carry out unauthorised transfer of funds or make payments using the customer’s Internet banking/payment apps.”
7. SIM swap or SIM cloning
In cases like SIM swap or SIM cloning, “Fraudsters may obtain a duplicate Subscriber Identity Module (SIM) card (including electronic-SIM) for the registered mobile number linked to the customer's bank account by gaining access to the customer's Subscriber Identity Module (SIM) card,” states RBI. Fraudsters use the OTP received on such duplicate SIM to carry out unauthorised transactions. Fraudsters generally collect the personal / identity details from the customer by posing as a telephone / mobile network staff and request the customer details in the name of offers such as - to provide free upgrade of SIM card from 3G to 4G or to provide additional benefits on the SIM card.
8. Frauds by compromising credentials on results through search engines
Customers use search engines to find contact information for their bank, insurance company, Aadhaar updation centre, and other businesses. These contact details on search engines are frequently modified to appear as if they belong to the respective entity by scammers.
“Customers may end up contacting unknown/unverified contact numbers of the fraudsters displayed as bank/company’s contact numbers on search engine. Once the customers call on these contact numbers, the imposters ask the customers to share their card credentials/details for verification. Assuming the fraudster to be a genuine representative of the , customers share their security details and thus fall prey to frauds.” RBI states in its booklet.
9. Scam through QR code scan
RBI explained how scam through QR code works, “Fraudsters often contact customers under various pretexts and trick them into scanning Quick Response (QR) codes using the apps on the customers’ phone. By scanning such QR codes, customers may unknowingly authorise the fraudsters to withdraw money from their account”.
10. Impersonation on social media
With lots of people spending time on social media and updating their details has made fraudsters easy to get details to dupe the people.
As per the RBI booklet, “Fraudsters create fake accounts using details of the users of social media platforms such as Facebook, Instagram, Twitter, etc. Fraudsters then send a request to the users’ friends asking for money for urgent medical purposes, payments, etc.
Fraudsters, using fake details, also contact users and gain users’ trust over a period of time. When the users’ share their personal or private information, the fraudsters use such information to blackmail or extort money from the users.”
Compiled By: Himansu S M / 27-Mar-2022
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