Online Fraud in India: A Legal Perspective

Online fraud, or cyber fraud, includes various criminal activities that use the internet to trick people for money or personal information. Sadly, these crimes are becoming more common in India. The financial damage from online fraud affects both individuals and businesses, and it also shakes people’s confidence in online transactions. Online financial fraud made up 77.4% of cybercrimes from January 2020 to June 2023, according to a survey by the Future Crime Research Foundation, a nonprofit incubated at IIT Kanpur. [1] The Reserve Bank of India reported that credit and debit card frauds amounted to Rs 276 crore in 2022-23, a significant increase from Rs 119 crore in 2020-21 and Rs 155 crore in 2021-22. These figures may even underestimate the true extent of the problem. [2] ?

This article looks at online fraud in India from a legal standpoint, exploring the laws and regulations aimed at tackling this issue, discussing the challenges in fighting it, and suggesting ways to improve the legal response to online fraud.?

Types of Online Fraud in India?

Online fraudsters use a variety of methods to deceive their victims. Some of the most common types of online fraud in India include:?

Phishing Scams?

• Scammers pose as legitimate entities like banks or e-commerce websites through emails, SMS, or fake websites to trick people into revealing personal or financial information.??
• Even the Indian government has issued a warning about fraudulent emails impersonating the Indian Cyber Crime Coordination Centre (“I4C”). These fake emails are designed to deceive recipients into believing they are from a legitimate cybercrime tracking body. This could potentially lead to financial or personal data theft.?

UPI Fraud??

• Scammers exploit the popularity of the Unified Payments Interface (“UPI”) by manipulating victims into sharing their UPI PINs or authorizing unauthorized transactions.??
• Since 2020, nearly half of India’s cybercrime cases have been linked to the UPI. The increase in UPI-related fraud is notable, particularly after the COVID-19 pandemic, as more people shifted to digital transactions.??
• Scammers often trick victims into sharing their UPI PINs or OTPs, or by getting them to download remote assistance apps, which grant scammers access to their devices and financial accounts.??

Credit Card Fraud?

• Fraudsters steal credit card details through skimming or phishing and use them for unauthorized online purchases.?
• Virtual credit card scams are becoming increasingly common, targeting individuals by exploiting digital financial transactions.??
• These scams often involve fraudsters creating fake virtual credit cards or stealing virtual card details to make unauthorized purchases.??
• They can also use phishing tactics to trick users into revealing their virtual card information?

Fake Delivery OTP Scams?

• Criminals pretend to be delivery companies and ask for One-Time Passwords (“OTPs”) under the guise of completing a delivery, then use these OTPs to access bank accounts.?
• Fake OTP delivery scams are targeting online shoppers in India, where scammers pose as delivery agents from e-commerce giants like Amazon and Flipkart.??

• They trick victims into sharing OTPs under the pretext of verifying or cancelling deliveries. Once the OTP is obtained, scammers can clone phones or access sensitive data, leading to financial theft.?

Legal Framework for Combating Online Fraud?

India’s legal response to online fraud is multifaceted, employing both established and contemporary legislation. The key statutes are as follows:?

Information Technology Act, 2000 (“IT Act”)?

This pioneering act serves as the cornerstone for tackling cybercrimes in India. It offers a legal framework for defining and criminalizing various online offences relevant to fraud, including:?

Section 66: This section deals with Computer Related Offences. This effectively targets online scams that rely on fake documents or compromised digital signatures to deceive victims.?

Section 66A-F: These sections address the punishments for the following:??

• Sending offensive messages through communication services,?
• Identity theft,?
• Cheating by personation by using computer resources,
• Violation of privacy, and?
• Cyber terrorism.?

Section 71: This section deals with the penalty for misrepresentation.?

Section 72: This section deals with the penalty for the breach of confidentiality and privacy.?

Section 73: This section deals with the penalty for publishing a false electronic signature certificate.??

Indian Penal Code (“IPC”)??

The Criminal Code of India established well before the Digital age, remains remarkably relevant in addressing online fraud.? Several sections can be effectively applied to online criminal activities, such as:?

• Section 419: This section broadly covers the offence of cheating, which encompasses a wide range of online fraudulent schemes. For instance, phishing scams that trick victims into revealing personal information or investment fraud that promises unrealistic returns fall under the ambit of this section.?
• Section 420: This section specifically addresses “dishonest inducement to deliver property.” This proves crucial in many online scams where victims are deceived into parting with money or valuables through false promises or manipulative tactics.?
• Section 465: In cases where online fraud involves creating fake documents (e.g., forged invoices) or altering electronic records (e.g., manipulating bank statements), this section on forgery becomes applicable.?

Challenges in the Fight Against Online Fraud in India?

Combating online fraud in India is fraught with complexities despite the existing legal framework. Online fraud often transcends geographical boundaries, allowing fraudsters to operate from anywhere globally. This poses significant challenges for Indian law enforcement agencies in tracking down and prosecuting these criminals.? Furthermore, cybercriminals are continuously developing new tactics and exploiting emerging technologies. This rapid evolution requires Indian law enforcement to stay ahead of the curve, demanding continuous adaptation and training. Lastly, one of the significant hurdles is the lack of awareness among Indian internet users about online threats. Many individuals fall victim to scams due to unawareness of the sophisticated methods employed by fraudsters. Enhancing public awareness through comprehensive campaigns and educational initiatives is vital.??

Looking Forward?

India’s battle against online fraud demands a proactive legal stance. From phishing scams to UPI fraud, the legal framework must adapt to combat digital deception effectively. Yet, challenges persist, including the borderless nature of cybercrime and the perpetual innovation of fraudsters. However, by enhancing law enforcement capabilities, fostering international cooperation, and raising public awareness, India can confront online fraud with resolve and resilience.??