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Last month, Debasish Ghosh, an employee in a software company in Bangalore, was shocked when he received a transaction alert on his wife's debit card. The card was used at a merchant outlet in north Mexico; Rs 25,000 was debited from her savings account.
“We have never travelled outside Asia. We received the transaction alert at 4 am. We did not notice it immediately. But later in the day, when we found money was debited from the account, we blocked the card. Initially, the bank was reluctant to register our complaint. But later, it admitted we were victims of a skimming attack,” Ghosh told Business Standard.
A week ago, Ankur Korane claimed Rs 1 crore was transferred from his current account in a private bank in Mumbai. The money was transferred through the real-time gross settlement system.
In recent months, many have registered complaints on Grahak Seva (the government's customer grievances website), alleging fraudulent transactions on their credit cards.
“Banks have encountered the highest number of fraud incidents in retail banking,” Deloitte Touche Tohmatsu said in its India banking fraud survey report released last year.
While oversight, deviation from existing controls and collusion between employees and external parties sometimes lead to fraudulent transactions, usually, weak systems at merchant outlets are held responsible. “Most frauds in the Indian banking system occur at the channel partner's end. While banks have to strictly comply with several regulations, there is no mandated regulatory environment for merchants and retail stores where the card is swiped. Their systems are often hacked to steal customer details. Consumers are also ignorant. All these are adding fuel to fire,” said Sivarama Krishan, executive director, PricewaterhouseCoopers India.
He added last year, about $8 billion was lost in India due to cyber crimes. There was no estimate on the money lost due to fraudulent transactions in the banking sector.
Bankers claimed sometimes, it was difficult to prevent credit card frauds because many countries didn't follow the 3D secure authentication protocol mandated in India. So, if a customer travels abroad and uses his card there, he/she is vulnerable to frauds such as skimming.
To prevent such cases, some banks have started replacing the cards of their customers after he/she returns from a foreign trip. To ensure secured transactions, banks are also replacing old magnetic strip-based cards with chip-based ones. Most bankers and industry analysts say costs on anti-fraud measures are rising.
