Fraudsters are finding a fertile market in India as the Internet spreads

Ravindra Gaikwad did what is expected of cyberpolice chasing an online scam: He followed the money.

But what at first seemed like a simple case of fraud in his small town in western India ended up sending him on a 2,000 kilometer journey across three Indian states.

It was only then that he began to understand how much such criminal enterprises were developing in his country.

“Fraudsters across India are preying on gullible people in small towns and villages where the internet and smartphones have just become commonplace,” he said.

India has long had a reputation as a home for online fraudsters who target victims in wealthy countries such as the United States. Last year, federal prosecutors in Georgia announced the indictment of India-based call centers and their directors, charging them with conspiring to forward tens of millions of scam calls to American consumers.

“These Indian call centers allegedly feared their victims and stole their money, including the life-saving money of all the victims,” ​​then-US Atty. Kurt Erskine of the Northern District of Georgia said at the time.

Now, with the rapid growth of the Internet in developing countries, India itself is proving a fertile market for homegrown fraudsters.

About 47% of people now have access to the Internet, up from 15% eight years ago. Even small restaurants in towns and cities have moved to contactless payments – a practice that was limited to big cities until a few years ago.

According to the Internet and Mobile Assn. of India, nearly half of India’s 692 million active internet users engage in online commerce. The group’s 2022 report predicted that India will have 900 million active internet users by 2025, meaning the untapped market for scams is growing.

Subsequently, cybercrimes such as phishing, password fraud, inducing victims to download screen monitoring apps, or setting up fake UPI links and QR codes are proving to be on the rise.

From March 2018 to December 2021, India reported more than 250,000 cases of online fraud involving nearly $96 million, the Finance Ministry told lawmakers last year. Only $7.8 million of that has been recovered.

Devidas Tuljapurkar, joint secretary of the All India Bank Employees Assn., traces the rise of Digital India, a program launched by Prime Minister Narendra Modi in 2015.

“Digital India should have been accompanied by digital literacy,” he said. “But that has not happened and a large part of the public is still ignorant about online financial transactions. That vulnerability is being exploited. Internet scams have become an industry.”

While cybercrime is still prevalent in the United States, which reported $3.3 billion worth of online fraud in 2020 alone, its rise is even more dramatic in a country where 90 percent of the population earns less than $300 a month.

Gaikwad, 49, was the head of the cybercell investigation unit in the city of Beed, in Maharashtra state, last March when the principal of an Urdu medium school reported that he had been targeted.

Last December, Mohammad Abdul Rahim, 52, was added to a WhatsApp group with an unknown phone number.

The name of the group made him curious: KBC. That’s short for Kaun Banega Crorepati — the popular Indian version of “Who Wants to Be a Millionaire.” Shortly after being added to the team, Rahim received a video message congratulating him on winning $30,000 and a car.

Rahim was convinced of the message’s authenticity in part because it contained a well-designed game show poster. The message was followed by a phone call. If he wants to go ahead with the application, the person on the other side said, he will have to deposit the tax money.

Over the next two days, Rahim sent about $2,100 in three installments via Google Pay.

Over three months, the fraudsters used a successful combination of threats and cajoling Rahim to pay more than $35,000, completely draining his bank account.

When Rahim asked about the car and money, he was told to keep quiet and not tell anyone about the lottery. If he did that, he was told that his file would be closed, meaning he would lose the money he had deposited and miss out on the lottery.

“So I kept sending them money,” said Rahim. “I feel stupid and ashamed.”

Gaikwad’s initial investigation of phone numbers and bank account details led him to five 21-year-old men from the state of Bihar – 1,100 miles to the east.

“They used to manage many such bank accounts,” Gaikwad said. “Their job was to withdraw money from these accounts and take them forward.” The five were arrested and are currently free on bail as the case continues.

However, they are believed to be small fish. Three out of five worked as laborers and two were still studying. Their role ended by pooling the money they had received from young victims like Rahim. In exchange, they received a commission of about $70, the authorities charged.

Gaikwad then tracked down four men who he believed were processing the money pooled in Bihar. The men, aged 22 to 28, hail from West Champaran, another district of Bihar. One of them, who has a master’s degree in technology, managed 150 bank accounts on his own, authorities said. The four were also arrested, charged and are in prison.

Most of the victims, Gaikwad said, were people from small towns and low-income villages.

“Even a so-called small scam can destroy the stability of a family,” he said. “We are trying to educate people about online fraud. Until then, we advise people not to make online purchases at weekends or after 5pm, when banks are closed. It slows down the investigation.”

Sheetalkumar Ballal, who is the current senior police inspector in the cyber investigations unit of Beed, said that there are more chances of getting this money if the victim touches his hand within the first hour.

“We call it the golden hour,” he said. “Money is often stuck at the payment gateway after being transferred. It’s easy to get money back there. Besides, we end up chasing people from different parts of the country.”

In October 2022, Gaikwad and his team arrested four men from West Champaran, which helped them trace the money trail.

From Bihar it passed through many different bank accounts, finally stopping at a trader in Surat – 1,300 miles west in the state of Gujarat. The trader found $1.5 million in different accounts held by four men from West Champaran.

Gaikwad summoned the trader for questioning. He expected to close the investigation after finding what he believed to be the final piece of the puzzle. The array of bank accounts had made him sleepless. But after about a year, he had reached the end.

Unless the merchant was unaware of the scam.

He was under the impression, Gaikwad concluded, that the money was payment for the embroidered clothes he had sent to Pakistan. “This is where the king sits,” Gaikwad said.

The suspect in Pakistan has been identified. He is believed to have contacted four men from West Champaran and ordered them to pay for the clothes he would buy from different vendors in Surat. Those sellers had an agent who managed their accounts.

The agent would receive money from accounts held by men from West Champaran and forward it to traders depending on their export orders.

“Traders thought they were getting paid for exporting,” Gaikwad said. “But it was paid with money stolen from different parts of India. A Pakistani man would get his embroidered clothes for free.”

The police cybercell unit does not have the authority to arrest a suspect in another country, so despite this problem, Rahim has not received his money, which is equivalent to three years of his salary.

“I find it difficult to pay my monthly installments,” said Rahim, who lives in Beed with his wife and two grown-up daughters. “The money I lost in this scam was my loan. I feel like I let my family down.”

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