Epidemic of digital scams: How to protect yourself and elderly family members from frauds (2024)

Synopsis

The obvious choke point is the banking system. Digital fraud, by its very nature, has to route the loot through digital transfers between bank accounts. This is what enables this type of crime. If dealt with properly, this is also its weak link. While there is some news about banks’ proposal to link with MHA’s cybercrime system, a lot more needs to be done.

Epidemic of digital scams: How to protect yourself and elderly family members from frauds (1)Getty Images

Epidemic of digital scams: How to protect yourself and elderly family members from frauds (2)

Dhirendra Kumar

CEO, Value Research

Though I typically focus on investment topics, I’m shifting gears to discuss a different aspect of finance: digital financial security. There have been numerous instances, where senior citizens have been primarily targeted in digital thefts. Are we going through a spate of financial frauds, wherein someone calls you with a story, and if you are gullible, you end up giving money digitally? Apparently, there have been crores of attempted frauds in the past few months. I believe this because I don’t know anyone, family, friend or colleague, who hasn’t faced such an attempt in recent months. If we have wall-to-wall coverage of such frauds, and if practically every person with a phone is facing this, surely there must have been crores, maybe tens of crores, of such attempts in the past few months. There’s no real data, but this is the impression I’ve gathered from everyone I’ve spoken to.

There are other clues to the mass targeting nature of these frauds. Some people have reported getting recorded messages that seek an automated response. It goes something like: “There is a legal problem with a courier package that you have sent. Please press 1 to know more details.” This is a clever way for the criminals to increase their footprint. Those who have heard of this so-called Fedex scam hang up, while susceptible victims press 1. The automated system appears to function as a pre-filter to increase the success rate. This shows that the people running these scams are highly organised and use the same technology as legitimate businesses that use IVR systems.

There are countless other methods that are being used by scamsters. The ‘classic’ method is of an older person getting calls and being asked to give the OTP received by him. The senior then discovers that Net banking transactions have been conducted from his account. The transactions are generally for something that is easily encashable or sellable. In recent times, fear has been used as a trigger by many scamsters. The victim is told that a child has been arrested or drugs have been found in a courier addressed to him or sent by him. These things make it hard for people to react calmly, and with equanimity. The scamsters have had a lot of experience manipulating victims, but the victims have no such equivalent experience.

How can these be stopped? The obvious choke point is the banking system. Digital fraud, by its very nature, has to route the loot through digital transfers between bank accounts. This is what enables this type of crime. If dealt with properly, this is also its weak link. While there is some news about banks’ proposal to link with MHA’s cybercrime system, it’s clear that a lot more needs to be done and, in fact, can be done.

In an all-electronic, fully KYC system, there should be no way for funds to become untraceable. Even if a scamster quickly distributes the loot to a large number of bank accounts and then withdraws cash, there is no reason for this not to be traceable. What stands in the way is old, slow systems that simply can’t handle this type of crime. There is some talk that that a new system will eventually be built, but I’m not holding my breath.

As a better system evolves, we must protect ourselves and the elderly in our families from falling prey to these scams. Educating ourselves about common tactics used by scamsters, never sharing sensitive information over phone or e-mail, hanging up on suspicious calls, setting up two-factor authentication, and regularly monitoring our financial statements can go a long way in preventing these crimes. Until systemic changes are implemented, vigilance and caution remain our best defence against these increasingly sophisticated scams. All these measures seem like the obvious things to do, but the interesting point is that this is all it takes. If you know of someone who was scammed in this manner, these simple and obvious steps would have saved them.

The Author is CEO, VALUE RESEARCH

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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