HAS DISCREPANCIES IN E-COMMERCE TRANSACTION SECURITY LED TO FRAUD?
Author: Deepanjali K.S, IV Year of B.Com, LL.B. from Ramaiah College of Law.
Technology, these days have become the part and parcel of a human’s life. It would not be wrong to say that without these advancements it will, become difficult to conduct day-to-day living. If we could recall the usage of the internet in India, which was roughly started in the year 1995. For over a decade the internet was merely for browsing. But these days the internet has developed to such an extent that, all the activities can be done in one clickbait, for example, order of groceries. The fact that these high-end facilities have their disadvantages. The researcher in this particular paper has tried the highlight, how people using the technology associated with payment of money, with the help of electronic devices like mobile or computer, have been fraudulently robbed. However, this paper does not neglect the importance of such platforms, for various reasons like, how they contribute to the economy or the easy access to resources. For instance, E-commerce or E-trade in the global market has drastically increased during a pandemic, global retail trade from 19% in 2019 to 17% in 2020. It would not be wrong to say that pandemic has accelerated digital transformation. However, this acceleration was also backed by online frauds, which made the pandemic an academic. With the increased usage of technology and emerging threats with it. It becomes very important to regulate the system of protection of online frauds. This article only focuses on the various types of frauds and how RBI and central have tried to protect people from fraudsters.
KEYWORDS: E-transaction, internet, customers, technology, frauds, privacy, scams, digital payment, payment channels.
The term transaction is usually used to describe the transfer of money or goods between persons or a business. For an activity to be termed as a transaction it has to meet two ends, i.e., starting point to the endpoint, such a transaction will have all the contractual obligations. E-transactions, e-commerce, or e-wallets are the financial terms involving the transfer of money or goods which in most cases does not involve the physical presence of the two parties entering the contract of transfer, therefore they can be put into one broad category called electronic, which is popularly connoted with letter ‘e’, it is very clear by know transactions that are done electronically or online is called E- transactions. But when the word E- transaction is used by IT operations, fraud, and channel managers, it takes on a more complex meaning. In application performance monitoring (APM) terms, drilling deeper into what appears to be a seamless transaction on the surface usually reveals a number of messages and distinct operations being correlated and performed beneath it. The number of related interactions making up the transaction is dependent on the number of applications and services actually “touched” along the transaction’s end-to-end path. However, there is a certain major contribution of e-commerce is that there is immense growth in the GDP graph. The digital economy has grown substantially, as there is an increased rate of job creation, improved productivity, enhanced customer choice, etc, India has witnessed consistent growth in recent years and the government has been investing in many e- transactional applications such as BHIM, Digidhan Abhiyaan, Ebiz and many more, which in turn would facilitate in easy transactions of digital money and optimistic utility of internet. India ranks at 2nd largest market operating online marketing. The motive is to develop a safe bridge between stakeholders of commercial activities and the end consumers with secured Indian cyberspace. Banks and financial institutions are moving towards setting up their own setups to mitigate the transfer of funds on digital platforms. And definitely the era of globalization that has helped business activities setup in faster and more manageable form for effective commercial transaction.
COMPLEXITY ASSOCIATED WITH E-TRANSACTIONS
The fact that e-transfers have been encountered has an effective way to conduct day-to-day business, these technologies have certain issues and disputes associated with them such as contractual and non-contractual, privacy, etc. An evolved business principle of conducting business at one click bite has its own distinct and unique legal concerns which are very different from traditional business models, for example, issues concerning privacy, data security breach, and many more. Privacy concerns have been majorly discussed, since large corporations yield their customer’s valuable confidential information such as credit and debit card numbers, bank account details, it is essential for the corporations to initiate strict data and cyber-crime protection regulations. Generally, e-transfers have been introduced for at most convince, which comes certain complexities associated with it majority would be in relation to cybercrimes. It is also called has computer crime because doing online transactions using computers is used as an instrument for executing illegal tasks such as committing frauds, trafficking in intellectual property, stealing identities, or privacy being violated.
There are also certain issues related to certain technical integration faced which has led consumers to not opt for these advanced services, for example, online payment systems run the proprietary gamut across hardware and software platforms. Credit card-affiliated payment processors, while more secure, can be expensive for online retailers. Added to the expense is the lack of interface between processing systems—it may be difficult or impossible for a PSP to link with other systems, resulting in processing and payment delays, lost transactions, and expensive fees. The factors associated with cyber-crime might be inadequate rules and regulations, poverty, easy accessibility of the internet, etc. which would impact on decline in financial growth, long-lasting effect on customer’s personal information, and impacts on productivity and definitely change in customer behavior.
VARIOUS TYPES OF FRAUDS IN E-COMMERCE TRANSFERS
E- Transfer being the most advanced form of money transfer, allows the exchange of digital money in a few seconds. It comes with a very real and risky side effect that being the threat of loss of money online frauds. Once a person is a victim of such fraud it would put him at a vulnerable point where it would be difficult to reach out to the bank, for instant recovery of loss. Hence it is very essential for the user to be careful while using such platforms and to understand the legitimacy of the transaction in which he is getting involved. For the outline few different types of E-transfer frauds, the research paper has tried to explain, however it is not an exhaustive list.
• Authorized Push Payment Fraud:
Such a fraud occurs when a person is tricked into transferring money to a bank account that is controlled by a criminal. A customer believes that the person to whom he is transferring the amount is legitimate. For example, a fraudster could claim that he is the representative of the respective bank and ask for their details and transfer money to an account controlled by them. There are some serious kinds of fraud, which have demonized customers to use online platforms. Some of them are purchase scams, impersonation scams, malicious misdirection, investment scams, romance scams, and many more. The main reason why the fraudsters opt for AAP is the easy movement of money. However, it is might be combatted by the banks by stricter vigilance, they have involved in understanding the behavior of the transactions, also developing a strong controlled environment and protection of customer swindlers. It was also necessary to end fraud stigma among the customers.
• Account Takeover Fraud:
In this case, the fraudster uses to get access to someone else credentials and then fraudulently transfers money into their account. Information’s like email addresses, phone numbers, or other personally identifiable information can be used to gain wrong access into someone’s bank account. For instance, there are constant awareness messages that are created by the official to not share any kind of personal information like aadhar card number which is directly linked to the bank accounts. Organizations are also required to look into the typical engagement of a customer with the platform and also highlight the suspicious patterns.
• Money Mule Fraud:
It occurs when a person acts as a middleman between the fraudster and the person who is going to be deceived. Money mules have three main key types. Firstly, when the person is tricked into a romantic or job opportunity scheme. Secondly, here mule ignores all the warnings from the bank and continues to follow the instructions of the fraudster. Finally, there are certain kinds of individuals who are already aware of their connections to a criminal scheme, they help the fraudster to create accounts in legitimate banks for easy transfer of money. Organizations can control such events, by reviewing a wide range of information and building holistic views on mule profiles.
This isn’t an exhaustive list of kinds of frauds there are certain other frauds like phishing, payroll scheme frauds, and many more. This paper has mainly focused on the most common frauds, to avoid any fraud being aware is very important.
SECURED PAYMENT SYSTEM REGULARED BY RBI
The big deterrent for the adaptation of digital payment is Cyber Crimes. There is a very thin line between secured and easy to use, it is very important to see the enforcement of the rule for secured payments and it is also essential to make such payment system cumbersome to use. Digital payment has boosted during the pandemic, the RBI has hiked the upper limit of the RTGS transaction. With which the RBI has also taken initiatives to pursue a uniform security framework for digital payment channels in the country via a proposal to Digital Payment Security Control Directions. RBI has also issued several circulars and guidelines in relation to security and risk mitigation measures for securing electronic/ digital payment systems. If someone has fraudulently withdrawn money from your bank account, inform your bank immediately. When you notify the bank, remember to take acknowledgment from your bank. The bank has to resolve your complaint within 90 days from the date of receipt. RBI’s guidelines on Costumers liability in unauthorized electronic banking transfer. If the transaction has happened because of your negligence, that is, because of your sharing your password, PIN, OTP, etc., you will have to bear the loss till you report it to your bank. If the fraudulent transactions continue even after you have informed the bank, your bank will have to reimburse those amounts. If you delay the reporting, your loss will increase and it will be decided based on the RBI guidelines and the policy approved by your bank's board. The central government has also launched a cyber-crime reporting portal. The government is associated with spreading awareness about cyber-crimes alter, training, and developing of law enforcement personnel/prosecutors/judicial forensics facilities, etc. “FCORD-FICN Coordinated Agency has been designated as Central Nodal Agency for the purpose enforcement of cyber-crime laws and for active reporting of the ADGP/IGP crime in each State/UT’s.
Consumers in India are highly concerned about increased digital payment frauds, 60% of respondents would call their banks to block their accounts or visit the bank branch to file a written complaint in the event of fraud. Only a few report fraud activities to police or a cybercrime unit. Fake UPI payment links that ask for money transfer via text or email. A fraudster has duped users with payment requests citing donation to NGOs, contributing to PM-CARE FUND are some of the new forms of scams that has increased during the pandemic. On a positive note, there is active utilization of the platforms. The authorities and the government has continues to promote them to maintain at most safety for effective usage. Covid-19 has been a major catalyst for the growth and adaptation of digital payment in India. There was also a significant increase in online fraud cases during the pandemic. According to a study by a UK-based market research firm YouGov and NASDAQ-listed ACI Worldwide. Nearly one-third of the consumers (31%) have been a recent victim of a card or digital payment fraud or know someone among their immediate family or friends who has. Among them, 17 percent of those frauds have been within the last month. Hence it is always advised that it is very important to be aware of the online payment system, before initiating any transfer do recheck it twice. Intimation or reporting such fraud activities is also very important