Read below to find out how the fraud works and what precautions you should take:
How the fraud works
Vikram Babbar, Partner, EY Forensic & Integrity Services explains how the fraud works:
The first act: Initiation of the fake call
In this type of fraud, the imposter at first identifies the gullible customer and calls him/her. This usually happens over messenger apps video calling feature. The crucial piece of the fraud is the bait which convinces the customer that the concerned official has some critical information about him. This bait can be literally anything which can be used to trap the customer like KYC number, address, etc. For example: the fraudster may collect information about you which is available on the public domain and present it to you in such a way that you get convinced.
Like what if a stranger told you that the property you recently sold is subject to income tax which you didn’t pay. Now he or she may get this information from property websites where you listed it or from the property broker’s website or even from a data leak in the property registrar’s office.
The second act: Initiation of the fear
Once the customer is convinced about the imposter being a real agent of CBI, income tax or other government departments, the fraudster narrates a story to the customer. He may say that you have evaded income tax or missed a crucial judicial process, etc and hence you may get arrested. Naturally when you hear the word jail, arrest, legal process a situation of panic will occur in most people. This fear and panic are what the fraudster uses to his advantage.In the panic of the situation, the fraudster further “stage manages” the scene through scrutiny of some documents, in some cases he simulates an actual police interrogation as well. The customer is then asked to share other information like Aadhaar documentation, bank account details, etc.
The final act: An escape route from the created problem
This staged acting which the fraudster so carefully played may convince some people. Once the customer is convinced that the enquiry process will take time (could be days or months) and only post complete verification, can he/she be considered innocent, the fraudsters offer a way out. The narrative that the fraudster plays is that all your legal, tax and other problems will go away if only you give him or her a bribe. The customer is asked to transfer money to different bank accounts pending inquiry and that the same would be transferred back once the investigation is complete.
“This type of scam is commonly known as “phishing” or “social engineering,” where fraudsters pose as legitimate officials to intimidate victims into providing money or personal information,” says Sheetal R Bhardwaj, executive member of Association of Certified Financial Crime Specialists – ACFCS.
Bhardwaj highlights that this type of scams including phishing and impersonation fraud have become a significant global issue and not just India specific.
“The Federal Trade Commission (FTC) in the United States reports millions of dollars lost to fraud each year. Various studies indicate that billions of dollars are lost annually worldwide due to different types of financial fraud, and the problem is escalating as technology evolves and more people conduct transactions online,” she says.
What precautions should you take for this kind of fraud
Bhardwaj shares some essential tips which you may follow for safeguarding yourself from this fraud:
● Verify the source: Always verify the identity of the caller or sender. Official organisations typically do not ask for sensitive information over the phone or via SMS or video call.
● Do not share personal information: Never share personal or financial information with someone who contacts you unexpectedly.
● Be sceptical of threats: Be suspicious if someone threatens you with legal action or fines. Legitimate organisations usually communicate through official channels and provide ample time to respond.
● Report suspicious activity: Report any suspicious messages to your bank and local authorities.
● Use security features: Enable two-factor authentication on your bank accounts and use strong, unique passwords for different services.
