57% of all fraud incidents in India are ‘platform’ frauds: PwC India- QHN

Since the onset of the Covid-19 pandemic, there has been a rise in the number of “platform frauds”, which account for 57 per cent of all frauds reported in India, a report released on Thursday said.

In platform frauds, the perpetrators use social media, e-commerce platforms, enterprise platforms and fintech apps to commit theft and other economic crimes.

Over 26 per cent of Indian organisations have lost over $1 million till now due to platform fraud, according to a report released by PwC India. The report, titled “Platforms: The new frontier of fraud in India”, is based on a survey of 111 companies.

The main method through which these frauds were committed was fraudulent access to the platforms. Sixty-four per cent of frauds took place through this method. Under this method, 42 per cent of cases were done through identity theft or account takeover, 25 per cent through device theft or cloning and 19 per cent via making a duplicate or synthetic ID. 

Four out of every ten platform frauds in India were conducted by internal perpetrators. Moreover, 26 per cent of platform frauds involved collusion between internal actors and external perpetrators. “This implies that if companies have stronger internal controls in place, over two-thirds of all platform frauds can be mitigated,” the report said.

Amongst the motives identified in such cases, financial gain was the most prevalent. Forty-four per cent of perpetrators in India engaging in such activities said they did it for monetary gain. Thirty-two per cent did it to damage a brand, and 21 per cent said they did it for competitive advantage.

Puneet Garkhel, partner and leader of Forensics Services at PwC India, said, “Indian consumers and organisations have been rapidly embracing new platforms over the past few years. On average, an Indian company operates with five different platforms as part of its regular business activities today. The emergence of and surge in e-commerce, contactless payments, home delivery models, remote working, etc., have not only led to various platform-based innovations but also opened avenues of entry for fraudsters.”

The report stated that 99 per cent of fraud incidents in the past 24 months have been on platforms such as financial, social media, goods, enterprises, media sharing, knowledge sharing and services.

It also highlighted that the majority of frauds now take place on digital platforms. 92 per cent of all customer frauds in India were payment (credit card and digital wallet) frauds, it said.

Financial frauds on transactions made to or from platforms accounted for 89 per cent of all platform frauds. “These frauds vary from basic unauthorised digital purchases to more complex identity theft and triangulation fraud,” the report said. 

“Organisations need to be cognizant of these evolving threats and adequately invest in fraud prevention and detection strategies to safeguard themselves,” Garkhel added.

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