India’s wildly popular payments system attracts scammers

Shivkali was one such victim. She had always wanted to own a scooter, but they were beyond her budget.

However, earlier in the year the 22-year-old, who lives in Bihar state in northeastern India, spotted one for sale on Facebook that looked like a great deal.

“I grabbed the opportunity without thinking,” she says.

A couple of clicks later and she was talking to the owner, who said that for $23 he would send over the vehicle papers.

That went smoothly, so Shivkali continued to send the owner money, via instant transfers. She eventually ended up paying $200, but the scooter (also commonly called a Scooty in India), was never delivered.

Shivkali realised she had been scammed.

“I did not think I could be cheated, as I have some education background and know what is happing in the world. But scammers are smart. They have an art of speaking to convince the opposite person,” she says.

The government and the central bank are looking at ways to protect UPI users from scammers.

But at the moment, if a victim wants compensation, they have to approach their bank.

“The problem is deep rooted,” says Dr Durgesh Pandey, an expert in financial crime.

“Most of the onus lies with banks and telecom companies. They are lax in making identity checks, that’s why the fraudster can’t be traced.

“But the challenge for banks particularly is that they have to balance between inclusivity, ease of business and enforcement of identity checks. If they are too rigid, the vulnerable section of society will remain without banking facilities.”

But Dr Pandey argues that in most cases of fraud, the bank is not totally to blame.

“It’s a complex question because the problem lies with banks, but it’s the victim who is giving his credentials in most case. I would say both victim and bank should bear the loss.”