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Data Security Breaches and Online Frauds

Private and public services delivered digitally unlock convenience and efficiency for large populations. However, with more people coming online and sharing their personal information, there is scope for them to become vulnerable to unauthorised access. As a result, financial frauds through digital platforms have increased in the last decade.

While few sectors in India still remain untouched by digitisation, technologies have been opening doors for new and more efficient ways to provide services. One of the biggest sectoral transformations has occurred within the financial sector. As of December 2022, 385 banks participated on the UPI platform. 7.8 bn monthly transactions, worth ~ USD 156 bn were recorded during the month, representing a jump of 35x over the same month in 2018.78 The convenience and high quality service associated with these digital products are driving more and more users everyday toward them.

Along with the benefits associated with these new services and products, there has also been a concomitant rise in vulnerability of individuals’ wealth and livelihood due to the emergence of new, associated crimes. Data breaches and digital frauds such as phishing, identity theft and online shopping frauds have risen exponentially with these sectoral changes. Rapid digital adoption among people, brought about by the COVID-19 pandemic, has exacerbated the frequency of these crimes.79

Definition

Lack of Data Security means exposure of confidential or sensitive information to an unauthorised person either through a breach or otherwise.82

Digital Financial Fraud is the use of digital means for criminal deception or abuse of web-enabled assets that results in financial gain.83

HOW DOES IT IMPACT INDIVIDUALS?

Sandhya is a micro entrepreneur on the outskirts of Ranchi. She works with a Self Help Group (SHG) and has begun using digital banking services.

She had been taking business loans from banks. Some time ago, she came across a digital credit platform that was offering low interest rates with no collateral required. She immediately registered for it and received the required money for her business. However, after a few weeks, she noticed that there had been a number of unauthorised transactions from her account. Her account had been hacked and she had lost all her savings.

She has filed an FIR with the police, however they still have no leads on the criminal. Sandhya was not aware of the dangers of digital banking and frauds due to which she has lost her money.

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