New Delhi: A comprehensive survey conducted by LocalCircles—an India-based community social media platform focusing on citizens and small businesses to voice concerns and drive policy change—that concluded in June this year has unveiled alarming trends regarding financial fraud among urban Indian families. The survey concluded that 47 percent of urban Indian families had someone who had experienced some type of financial fraud.
The survey, which received responses from over 48,000 citizens across 367 districts in India, highlighted widespread vulnerabilities in the way individuals manage and share their financial data. According to previous surveys by LocalCircles, six of 10 Indians do not even report financial fraud. As a follow-up to this, the organisation conducted one more survey to understand the root causes of financial fraud, especially practices around storing personal and financial data.
Key findings from the survey reveal that a significant portion of respondents engage in risky behaviours concerning their financial information. A startling 17 percent of those surveyed admitted to storing critical financial passwords, including those for ATM, debit cards, credit cards, and bank accounts, in insecure locations on their mobile phones such as notes or contact lists. This practice exposes them to heightened risks of data theft and unauthorised access, especially in cases where mobile devices are lost or hacked.
When asked where they stored their passwords, “9 percent indicating that they store passwords in ‘mobile phone notes’; 4 percent indicated that they store passwords in the ‘mobile phone contact list’; 4 percent indicated that they store them ‘in password app on the phone’; 4 percent indicated that they store them in ‘another app/ place in the mobile phone’; 5 percent stated that they ‘keep them in my wallet/ purse’; while 14 percent ‘just have them memorised’ and 16 percent indicated that they keep them ‘on my computer/laptop’. In addition, 39 percent of respondents indicated that they ‘have another place/ way to store them’ while the remaining 5 percent of respondents did not give a clear answer,” the report highlighted.
Another worrisome trend that LocalCircles found was that 34 percent of respondents share their important financial passwords, including ATM, credit and debit card passwords, with others, predominantly family members. This practice, although rooted in trust, amplifies the risk of fraud as shared passwords can potentially be misused or compromised.
Of 12,265 responses, 28 percent admitted that “‘1 or more of my close family members’; 4 percent of respondents stated, ‘1 or more of my domestic or office staff’; and 2 percent of respondents stated, ‘1 or more of my friends’. The remaining 66 percent of respondents stated, ‘no one other than myself’,” the report elaborated.
Another significant revelation was the prevalence of financial fraud experiences among respondents and their families. A staggering 53 percent reported having encountered some form of financial fraud in the past five years. The types of fraud reported include credit/debit card and UPI fraud, fraud related to buying and selling on classified sites, and bank account fraud. “Theft of mobile phones, credit/ debit cards, laptops, etc., are often reported by citizens. If the culprits are able to get access to the password/ pin, it can easily invariably lead to financial losses for the individual,” it explained.
The survey also shed light on the widespread sharing of personal identification documents such as Aadhaar, PAN cards, and driving licences for various applications and proofs. Approximately 97 percent of respondents shared their Aadhaar details, followed by 68 percent for PAN cards and 38 percent for driving licences, raising concerns about privacy and the potential for misuse, especially given the absence of robust data protection laws in India.
These findings come amidst a backdrop of escalating financial fraud cases nationwide. The Reserve Bank of India (RBI) recently disclosed a significant increase in bank and digital frauds, underscoring a 300 percent rise in bank frauds and a staggering 708 percent increase in digital frauds over the past two years.
“With personal data law yet to become operational in India, their [Indians] personal data can easily be sold or shared. Such personally identifiable information along with mobile number, email and address easily available can be combined with their financial passwords to conduct financial frauds…” noted the LocalCircles report.
LocalCircles emphasised the urgent need for public awareness campaigns and regulatory interventions to mitigate these risks effectively. The organisation further plans to escalate its findings to key stakeholders including the RBI, Ministry of Electronics and Information Technology (MEITY), and the Ministry of Consumer Affairs to advocate for stronger data protection measures and stricter enforcement against fraudulent activities, it said.
Meanwhile, it said that “the personal data law must be implemented for all businesses including MSMEs such that we create a new thinking on how businesses handle personal data.”
(Edited by Tikli Basu)
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