Payment fraud is a significant concern for individuals and businesses alike. It encompasses a variety of deceptive practices aimed at stealing money or obtaining goods and services through fraudulent: India's three-way payment gateway.

In India, digital payments have grown manifold in the last few years. Be it small traders, large corporates or the general public, people are using online transactions every day for various reasons. While awareness about digital payment methods is increasing, there is still a need to be more aware of the frauds associated with them. According to the Reserve Bank of India (RBI), in the second half of 2022 alone, more than 2,330 cases of fraud were reported with a loss of Rs. 87 million.

As the digital payments ecosystem continues to grow, so do the various payment fraud types. Understanding these types of fraud and how to respond if you are targeted can help you enjoy the convenience of digital payments while avoiding falling into financial risk.

RBI, in collaboration with other stakeholders in the digital payments space, has been working to make payment frauds, as well as other forms of financial frauds, more widely known.

Here are some common types of payment fraud, and understanding them can help you better protect your identity and money:

1. Phishing

In phishing scams, fraudsters masquerade as well-known companies and trick people into sharing personal or banking information. They may use the company's brand name, logo or other identifier.

You may receive emails or text messages containing links to malicious websites asking you to enter financial information. This information is then used to make fraudulent purchases or access bank accounts.

Be careful to check emails or text messages for grammatical errors, spelling mistakes or other suspicious elements. In addition, do not click on a link in an email or text message unless you are sure it is from a trusted source.

2. Third-party websites and triangular fraud

This type of fraud involves the use of third-party websites to purchase goods or services with stolen credit card information. Fraudsters typically use stolen credit cards to purchase goods or services on third-party websites and then use those goods or services to make additional purchases on other websites, which is known as triangular fraud.

To prevent this type of fraud, use only trusted websites and always check the security measures of the website. Also, avoid providing your credit card information if you are unsure about the trustworthiness of a third-party site.

3. ATM card fraud

Fraudsters can swipe your card information when they install a device on an ATM. This device is designed to look like a legitimate part of the ATM. Fraudsters can then use this information to make fraudulent purchases or withdraw money from your bank account.

To prevent ATM card fraud:

- Always be alert to your surroundings when using ATMs

- Look for any suspicious devices that may be attached to the machine.

- If you suspect that the ATM has been tampered with, do not use the

- Use of ATMs of reputable banks

- Cover the keypad with your hand when entering the PIN code

4. Point-of-sale equipment (PoS) fraud

PoS devices are widely used in shops to accept credit and debit card payments. Unfortunately, these devices can be manipulated by fraudsters to steal card information. Fraudsters may install devices on PoS systems to read information when cards are swiped. Or, they may use fake PoS terminals to collect card information.

If you notice any suspicious equipment attached to the PoS system, do not use it. Always ask for receipts for transactions made through PoS devices. Also, check transaction text messages and your bank account and credit card statements for any suspicious activity.

5. Voice fishing (Vishing)

Voice phishing involves the use of telephone calls or text messages to obtain financial information. Fraudsters often pose as representatives of legitimate companies or financial institutions and ask for confidential information such as credit card numbers or bank account details.

The best way to prevent voice phishing is to not give out your financial information over the phone or via text message. If you receive a call or text message from a suspicious source, hang up or delete the message immediately. Always verify the authenticity of a call or text message with the company or financial institution claiming to be contacting you.

6. Wire transfer fraud

In this type of payment fraud, fraudsters typically pose as trustworthy companies or individuals and demand payment for goods or services that do not exist. They may also demand payment by wire transfer for goods that were legitimately purchased and then disappear.

To prevent wire transfer fraud, verify the legitimacy of the company or person you are dealing with before sending any money. Additionally, be wary of anyone requesting payment via wire transfer, as this is often a sign of fraud.

7. Page hijacking

Pagejacking is a type of payment fraud that involves the creation of fake websites that look like legitimate websites. Fraudsters copy the design of the legitimate site and use it to collect sensitive information from unsuspecting victims. They can also hijack certain pages of legitimate websites.

Check for any suspicious elements such as spelling mistakes or improper grammar, which may indicate that the site is fake. Also, avoid entering sensitive information on a website unless you are sure it is legitimate.

8. QR code fraud

QR codes are becoming an increasingly popular method of payment. Unfortunately, they are also being used to defraud unsuspecting victims. Fraudsters can create fake QR codes that look legitimate and use them to collect payment information.

Remember, you do not need to enter a UPI PIN and password or scan a QR code to receive money. If you are asked to do so, refuse immediately. When sending money, check the source of the QR code before scanning it. Additionally, scan the code using a security app specifically designed to detect fake QR codes.

9. Lottery fraud

Lottery fraud is a type of payment fraud that uses fake lottery tickets to collect money from victims. Fraudsters typically make purchases using fake or stolen lottery tickets and then use the money to fund their activities.

Do not purchase a lottery ticket if it appears to be fake or tampered with. Also, do not respond to emails or text messages offering lottery tickets as these are usually fraudulent.

10. Internet job search fraud

Fraudsters can masquerade as employers and collect money from unsuspecting victims. Fraudsters usually post jobs online and ask for payment for training materials or application fees.

If a job advert looks too good to be true, it is probably fake. Also, do not send money to an employer until you have verified the legitimacy of the job.

Raising Awareness to Combat Fraud

It's a good habit to check your debit and credit card statements regularly for fraudulent charges. If you notice any problems, contact your bank immediately. If such incidents are reported within a few days, most banks will refund your money and may be able to prevent it from happening again. Films and TV shows like Jamtara reveal how financial frauds work. You can also check out the RBI's resources for up-to-date information and awareness content to make sure you don't lose your money to fraudsters.