How to stay ahead of digital financing frauds
According to statistics, India recorded nearly 164 billion digital payments in 2024. However, reports indicate that around 800 digital payment fraud cases occur daily, which is 10 times more than what the RBI’s annual report suggests. As digital finance expands in India, so does the threat of cybercrime, leaving millions of individuals and organizations vulnerable to fraud. This results in massive losses and highlights the critical need for improved security and awareness in the digital banking sector.
Key statistics:
In 2024, cyber fraud in India cost more than Rs 177 crore, which is more than double the amount lost in 2023, when the total was Rs 69.68 crore.
The National Crime Records Bureau (NCRB) reported that in 2023 alone, cybercrimes led to a loss of ₹66.66 crore, with 4,850 cases reported.
Furthermore, the National Cybercrime Reporting Portal (NCRP) recorded a loss of ₹10,319 crore in 2023, with 6.94 lakh complaints received.
These numbers highlight the intensity of threat that digital financial fraud poses to individuals and businesses alike.
We recommend organizations must explore smart technology in the energy approach, to circumvent hindrances to the growth because of inefficiency and increased finances.
Unmasking Financial Frauds in the Cyber Domain
Digital financial frauds consist of various activities targeting online and mobile banking systems. Fraudsters use complex methods such as phishing, malware, and social engineering to steal personal information and carry out unauthorized transactions. Victims are often influenced into transferring money or sharing sensitive information, which fraudsters then use to siphon funds anonymously. This deception is squared by the ease with which your data can be bought online, further facilitating these crimes.
Some Real life incidents
Cryptocurrency scam
A recent case involved Milan Garg, part of a ₹1,740-crore cryptocurrency scam. Garg, who was arrested in Kolkata after returning from Dubai, was part of a scheme that defrauded investors in Himachal Pradesh using locally created cryptocurrency called Korvio Coin (KRO coins).
Man-in-the-Middle Attack
A construction tech firm in Pune was scammed out of Rs 13.8 lakh due to MitM attack. The fraudsters intercepted email communications between the company and a stone-crusher supplier. They spoofed the supplier’s email address and instructed the firm to transfer funds to a fraudulent account. Despite making the payments over several months, the firm never received the goods. The scam was uncovered only after the company realized the payments were not for legitimate transactions. This highlights the critical need for secure email practices and verification in financial dealings to prevent MitM attacks.
What’s Driving Digital Fraud?
While digital platforms make things convenient, this convenience comes at a cost.
Weak Anti-Fraud Measures:
- Human Emotions: Fraudsters often play on our emotions through phishing and social engineering, tricking us into sharing personal or financial details we wouldn’t normally disclose.
To learn more about how to protect yourself from these tactics, check out our blog on social engineering.
Third-Party Apps:
- Third-Party App Vulnerabilities: Many apps used for financial transactions come with their own security risks, often due to poor security practices or outdated frameworks. Users unknowingly grant these apps permissions that can be exploited by fraudsters to access sensitive financial data. Addressing these risks requires a comprehensive approach to managing third-party risks.
<aside> 💡 BioCatch reports 55% of digital banking frauds detected in India were caused by third-party takeovers.
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Evolving Fraud Tactics:
- Advanced Technology: Fraudsters are using cutting-edge technologies like artificial intelligence (AI) and machine learning (ML) to make their schemes harder to detect.
Deep fake AI is a technology that uses artificial intelligence to generate highly realistic, but fake media content. These algorithms are able to analyze and alter existing images or videos to make it seem like the individuals are saying or doing things they never actually did.
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Recently, WPP CEO Mark Read was targeted by such a scam. Fraudsters used AI voice cloning and his publicly available image to impersonate him during a fake Microsoft Teams meeting. The attackers aimed to solicit money and personal details, but thanks to WPP staff’s vigilance, the attempt was thwarted.
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In another notable case of deepfake fraud, cybercriminals used AI-generated audio to impersonate the CEO of a Germany-based parent company, successfully scamming a U.K. energy company out of $243,000.
- The attackers convinced the U.K. CEO to make an urgent wire transfer to a Hungarian supplier, which was then funneled to accounts in Mexico.
- In the second phone call, the fraudsters asked for another wire transfer, claiming that the first payment had already been reimbursed. However, the U.K. company’s CEO became suspicious because the reimbursement hadn’t gone through. As a result, the CEO refused to make the second payment, leading to further skepticism during the third call, which came from an Austrian phone number. </aside>
While these instances highlight the darker side of AI, it’s also being leveraged for positive outcomes in cybersecurity.
Smart Strategies to Shield Your Finances
For effective prevention of cybercrime, consider following these practices:
- Empower Yourself with Knowledge:
88% of data breaches are caused by human errors, according to Stanford Research.
These numbers should explain the importance of staying vigilant. Keeping up-to-date with the latest cyber threats and phishing tactics empowers users to recognize and avoid risks.
Run simulated phishing exercises for your employees to make them aware of how these digital payment frauds work. For comprehensive training, consider exploring our cybersecurity training solution to improve your team’s awareness.
- Fortify Access with Multi-Factor Authentication (MFA): MFA means having multiple forms of identification (passwords, codes, biometrics) because this reduces the risk of unauthorized access significantly. Even if passwords are compromised, this method provides an extra layer of security.
According to a report, Medium-sized organizations have an MFA adoption rate of 34%, while smaller businesses have a lower adoption rate of 27%
- Stay Ahead with Regular Security Audits: Regularly auditing the security of devices and banking platforms can help you stay ahead of vulnerabilities. Watching for unusual activity and ensuring that institutions perform comprehensive checks is crucial. Use tools that can guide these efforts, helping you strategically invest in the areas that need the most attention.
- Keep Your Software Armor Updated: Regularly update your organization’s operating systems, antivirus software, and banking apps to patch vulnerabilities. Collaboration between users and institutions in maintaining updated software helps secure the digital banking environment.
- Secure Your Future: Given the increasing prevalence of digital threats, securing cyber insurance is vital for protecting your organization. Many insurers now mandate evidence of robust security practices before they will issue coverage.
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To help you determine the right level of protection for your specific needs, our Cyber Quantification solution can assist. This tool evaluates your organization’s unique risk profile and provides tailored recommendations, ensuring that you have the appropriate coverage in place.
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As you strengthen your defenses, don’t overlook the potential risks associated with third-party applications. Knowing how to mitigate these risks can further enhance your security posture.
By implementing these fraud detection and prevention methods, you can improve your defenses and protect your financial assets from cyber threats
Conclusion
While digital financing has many advantages, it’s important to approach it wisely and understand that there are perks as well as risks. By staying vigilant, implementing dual authentication methods, and advocating for clear legislation, we can navigate the complexities of digital payment frauds. Education and awareness will be our most powerful tools in preventing cybercrime as we welcome the future of financial technology.
