Recently, Delhi police busted a multi-crore Chinese loan application fraud and extortion racket, and arrested four people including the mastermind behind the scam.
The 149 employees employed who helped operate the racket have been notified. Items seized include, among others, 153 hard drives, three laptop computers, 141 keypad cell phones, 10 Android phones and four digital video recorders (DVRs).
There were four Indians involved in the scam, who were in contact with Chinese nationals, who were actually handling the loan application application. An individual named Anil Kumar was the mastermind behind the scam, while three others, Alok Sharma (24), Avnish (22) and Kannan (35) were his accomplices.
In April, the Reserve Bank of India (RBI) task force found 600 illegal loan applications, 27 of which were banned.
With the rise in digital fraud cases, the central bank is reviewing know-your-customer (KYC) standards to identify shortcomings and close gaps.
In 2020, about 60.2% of recorded cybercrime cases were related to fraud, or 30,142 cases out of 50,035, according to the latest data from the National Crime Records Bureau (NCRB).
While cyber fraudsters target everyone, the elderly and young are more vulnerable. Older people are not as internet savvy and unfamiliar with digital safety standards. As such, they easily fall prey to these types of fraud.
According to the Microsoft 2021 Global Tech Support Scam research report, millennials (aged 24-37) in India are among the groups most susceptible to online scams, with 58% of those who participated in a scam having suffered a loss. monetary.
A FIS study published in 2019 also indicates that millennials are the most affected by online payment fraud in India, as they constitute the largest audience in terms of online transactions. According to the report, they are more likely to navigate to fake websites or click on pop-ups.
The RBI also said in its digital lending task force report that online platforms and mobile apps “create unique and new risks for consumers as there is a greater emphasis on convenience. or ease of access than on protection Millennials may find it easier to “create” an account with a Digital Lending Application (DLA) from an unregulated fintech provider or lender phantom rather than using a tool or channel provided by traditional banks or non-bank financial companies (NBFCs).”
How Borrowers Lose
According to experts, there has been a marked increase in complaints about loan application scams in India, especially in the last couple of years.
“Through these apps, scammers target low-income groups or financially unsophisticated people who lend less money. The modus operandi typically involves the deduction of loan processing fees, along with penalties, and at significantly higher interest rates in case of late payment.This can be quite substantial as compared to an RBI approved institution.Additionally, it is alleged that these apps also have access to contacts and other borrower’s mobile phone information, which can be used to harass them,” says KV Karthik, Partner, Forensics, Financial Consulting, Deloitte India, a consulting firm.
In fact, there are many unregistered digital loan apps, which provide these instant loans.
Says Karthik: “Part of the due diligence a borrower can do is to check whether the lender is approved by RBI and/or is associated with a financial institution, their website details, existence of physical offices, Company Identification Number (CIN) and Certificate of Registration (CoR) details in addition to verifying loan terms and conditions.
“As the saying goes, if it’s too good to be true, it probably isn’t. Borrowers should be extremely cautious of applications willing to provide loans without a credit history check. Unfortunately, if someone falls prey to these scams, their only option is to approach the police.
Legal recourse if you are duped
Although there are many ways fraudsters can trick you, there are always legal steps you can take as a remedy. That said, the best way to protect yourself from being duped is to stay aware and exercise caution.
As a precaution, you should not share your personal data with anyone on social media or otherwise, and use simple techniques, such as refraining from clicking on unknown web links, ensuring the use of strong passwords and changing them regularly. password. Seniors should also be made aware that cyber crimes are punishable under Indian IT law and timely reporting is crucial.
According to experts, the option available to borrowers is to file an FIR against such operators. “In most cases, the operators are not registered with the RBI as lenders and are therefore illegal. Moreover, the interest rates charged are exorbitant and therefore not recoverable in the ordinary course of business. However, in order to recover the sums recovered by the operators, the consumers will have to make a long and arduous journey before the normal civil courts, or consumer courts. Through criminal proceedings, the operators can be implicated, but the consumer may not necessarily be able to recover the product,” says Abhishek Tripathi, Managing Partner, Sarthak Advocates & Solicitors.
“RBI has also advised borrowers to check if the platform that lent is registered with RBI, and if not, the same should be brought to the notice of RBI,” Tripathi adds.
“When such online frauds occur, the first point is to interview the people who are being duped. They must be reasonable and practical about such transactions and know what they are getting into. They must be very careful and alert. They cannot just give their bank and OTP details to a random unknown person. Second, as soon as this happens, they should report it to the cybercrime unit and file an FIR. If need be, they should report a specific FIR against those involved in fraud,” says Abhishek Rastogi, Partner, Khaitan and Co, a corporate law firm.
Precautions for borrowers
Here is a list of do’s and don’ts that borrowers should follow to avoid getting duped.
1) Do not click on unknown and unverified links and immediately delete such SMS/emails from unknown sender to avoid accessing them by mistake in future.
2) Unsubscribe from emails providing links to a bank, e-commerce site and/or search engine and block the sender’s email id before deleting such emails.
3) Always go to the official website of your bank or service provider. Check website details carefully, especially when it is necessary to enter financial credentials. Check the secure sign (https with a padlock symbol) on the website before entering secure credentials.
4) Check URLs and domain names received in emails for misspellings. In case of suspicion, inform the financial institution.
5) Bank officials, financial institutions, RBI and/or any genuine entity will never ask customers to share confidential information such as username, password, card details, CVV, OTP
6) Never share this confidential information with anyone, even your family members and friends.
7) Always be careful when buying or selling products through online sales platforms.
8) Always remember that you do not need to enter a PIN or password to receive money.
9) If UPI or any other application asks you to enter a PIN code to complete a transaction, it means that you will be sending money instead of receiving it.
10) Never download any app from unverified or unknown sources, or as requested or guided by an unknown person
11) As a precaution, check the publishers or owners of the application before downloading it, and also check its user ratings
12) When downloading an application, check the permission(s) and access to your wanted data, such as contacts, photographs, etc. Grant only the permissions absolutely necessary to use the app you want.
13) Always check that there is no additional device connected, near the card insertion slot or ATM keypad, before performing a transaction.
14) Cover the keypad with your other hand while entering the PIN code.
15) NEVER write down the PIN code on your bank card.