The Reserve Bank of India (RBI) has recently cautioned people against frauds in the name of Know Your Customer (KYC) updation and advised them not to share key information like account details or passwords with unidentified persons or agencies.
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This development comes in the wake of rising KYC frauds. Since the advent of e-payments, several cases of KYC fraud have come to light. Among these, the most common is when a fraudster calls on behalf of a bank to collect personal information.
Here are some types of KYC frauds that are taking place:
According to Arpit Ratan, co-founder and chief business officer at Signzy, fake re-KYC, identity theft, vishing and smishing are the most commonly attempted frauds in India. Scamsters lure users to share their personal details, such as account login credentials, card information, OTP, etc, and offer cybercriminals unauthorised access over their accounts.
"The fraudster collects the user's information from social networking sites like Facebook, LinkedIn, Twitter and places a forged phone call pretending to be a bank or company representative. They then ask the user to provide KYC information to ensure an updated database," Ratan said in an interaction with CNBC-TV18.
Once a customer falls into the trap, the caller asks for installing some malicious app and asks to share a code and finally defrauds the customer.
This is called vishing.
The same also happens when customers receive SMS to update the KYC and are asked to call a number. This is known as smishing.
For e-wallets too, according to Kumar Shekhar, vice president, member operations at Tide (India), this kind of fraud has increased as full KYC is mandatory within 12 months to enjoy all the benefits.
"In fact, such frauds have witnessed a surge during COVID times," Kumar said while speaking to CNBC-TV18.
Additionally, a new scam has surfaced recently. Victims' phones were remotely controlled via an app. The caller tells the victim to verify KYC and then hack the bank account.
How to avoid these frauds?
According to Ratan, these frauds can be avoided by increasing awareness among customers.
Speaking exclusively to CNBC-TV18, Sonam Chandwani, managing partner at KS Legal & Associates said consumers should be careful before submitting any personal information when it comes to banking.
"They should remember that banks do not ask for such information. So, people should be on the lookout for fraudsters," she said.
Adding to this, Kumar of Tide (India) said if customers receive an SMS, they should connect with the branch and confirm about the same.
"It’s better to not share card credentials like CVV, OTP, ATM PIN etc. Also, one should not call on the number given in the SMS. Customers should never open unknown attachments in SMSs or emails,” he said.
On the other hand, lenders can also significantly contribute to fraud reduction by adopting e-KYC more often.
Since eKYC is a full-proof and robust form of verification, Ankit Bhatnagar, Head of Product, Mswipe said that non-bank entities can offer a much safer platform to their customers.
"This will also improve trust levels among customers because only licensed entities will be permitted to conduct eKYC,” he added.
(Edited by : Jomy Jos Pullokaran)
First Published: Sept 16, 2021 7:38 AM IST
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