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5 mins read
07 January 2025

What is payment fraud

Payment fraud refers to any type of false or illegal transaction completed by a cybercriminal. The fraudster's goal is to steal money, personal information, or other assets from the victim. Payment fraud can occur in various forms, including credit card fraud, identity theft, phishing, and more.

In today's digital age, payment fraud has become increasingly sophisticated, leveraging advanced technologies and exploiting vulnerabilities in online payment systems. This type of fraud not only affects individuals but also businesses, leading to significant financial losses and reputational damage.

Understanding the different types of payment fraud and how they operate is crucial for both consumers and businesses. By being aware of the common tactics used by fraudsters, individuals and organisations can take proactive steps to protect themselves and mitigate the risks associated with payment fraud.

In the digital age, vigilance is key when making online payments. Fraudsters exploit vulnerabilities, from phishing emails to fake websites, aiming to steal financial data. Prioritise secure, reputable platforms and verify site authenticity by checking for secure connections, authentic logos, and domain spelling. Avoid sharing sensitive information via email or pop-up requests. Implement two-factor authentication for added security. Regularly monitor bank statements for irregularities and promptly report any suspicious activity. Educate yourself on common scams and stay updated on security measures. By staying vigilant, verifying sources, and being cautious, you can safeguard yourself against online payment fraud. 

Types of payment frauds

Payment frauds come in various forms, each with its own methods and targets. Understanding these types can help individuals and businesses recognise and prevent fraudulent activities. Here are some common types of payment frauds:

  1. Credit card fraud: This occurs when someone uses another person's credit card information without permission to make unauthorised purchases or withdraw funds. It can happen through physical theft or by stealing card details online.
  2. Identity theft: Fraudsters steal personal information, such as Social Security numbers, bank account details, or other sensitive data, to impersonate the victim and gain access to their financial accounts.
  3. Phishing: This involves sending deceptive emails, messages, or websites that appear legitimate to trick individuals into providing personal and financial information. Phishing attacks often mimic trusted entities like banks or online retailers.
  4. Chargeback fraud: Also known as friendly fraud, this occurs when a customer makes a purchase and then disputes the charge with their bank, claiming it was unauthorised or that they never received the goods or services.
  5. Account takeover: In this type of fraud, criminals gain access to a victim's online accounts, such as banking or e-commerce accounts, and use them to make unauthorised transactions.
  6. Card-Not-Present (CNP) fraud: This happens when fraudsters use stolen card information to make purchases online or over the phone, where the physical card is not required.
  7. Merchant fraud: Fraudulent merchants set up fake online stores or marketplaces to collect payments for goods or services that are never delivered.
  8. Wire transfer fraud: This involves tricking individuals or businesses into transferring money to fraudulent accounts, often through sophisticated social engineering tactics.

By being aware of these different types of payment frauds, individuals and businesses can better protect themselves and take proactive measures to prevent falling victim to these schemes.

Cyber Security Awareness

The internet has opened doors to various possibilities – especially in the financial sector. You can make online payments, apply for loans, and buy goods online. However, not all websites are reliable, and not every link is verified or safe to open. Cyber security attacks can compromise your personal information, and you may lose your savings after falling prey to a fraudster’s trickery.

Therefore, cyber awareness and cyber vigilance are paramount. Here are a few dos and don’ts that you must know to avoid scams and fraudulent online behaviour.

Dos to prevent Cyber Attacks

  • Verify the loan offers from any bank or NBFC by visiting the institution’s nearest branch.
  • Contact the official or registered customer helpline number. For instance, you can contact Bajaj Finserv customer care helpline – +91-8698010101 – if you have any queries.
  • Ensure that you are engaging with verified pages on social media platforms, represented by the blue tick.
  • Be extra cautious while answering calls from unverified sources, as they may trick you into revealing your details.
  • Ensure that you access safe websites, which always begin with ‘HTTPS’.
  • Inform about cybersecurity-related incidents by calling the toll-free number ‘1930’ and talking to the national cybercrime portal.

Don’ts to prevent Cyber Attacks

  • Do not entertain scammers who persuade you to reveal personal information or download unreliable applications.
  • Do not click on dubious links that will redirect you to another website.
  • Do not open malicious links sent through SMS or e-mail.
  • Do not respond to e-mails from unknown people or companies, especially if they carry an attachment. Report about any suspicious e-mails to Bajaj Finance Limited.
  • Do not share OTP, passwords, debit/ credit card details, mobile numbers etc., with anyone.
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UPI Fraud Awareness

The Unified Payments Interface (UPI) is a simple and effective solution that allows financial transactions on the go. It lets you connect multiple bank accounts with one mobile application. You can send and receive money by knowing the UPI ID and the PIN. While it has enhanced user convenience, UPI frauds in India have increased exponentially over the last few years.

Therefore, you need to be aware of the various methods employed by fraudsters to execute UPI scams. Remember the dos and don’ts as you pay your bills on the Bajaj Finserv BBPS platform – or undertake transactions elsewhere.

Dos to avoid UPI frauds:

  • Keep your UPI PIN private.
  • Enter the UPI PIN when prompted by the transaction screen only.
  • Set a UPI PIN that is complex and difficult to guess.
  • Protect your smartphone with stringent security features like face ID, pattern lock or PIN.
  • Perform transactions using your UPI ID and PIN when you have a stable and secure internet connection.
  • If you suspect any suspicious activity, then contact your bank and reset the UPI PIN without delay.
  • Keep tabs on your expenses and the messages received via SMS.

Don’ts to avoid UPI scams:

  • Do not share your UPI PIN with anyone.
  • Do not provide your UPI PIN while receiving money, as it does not require any PIN.
  • Do not click on any unknown payment request.
  • No Bajaj Finserv employee will call and ask you for the UPI PIN. Do not share the PIN with anyone under any circumstance.
  • Do not transfer money without knowing the person.
  • Do not download third-party applications after being instructed by a stranger through call, as it may lead to UPI fraud.
  • Do not look for Bajaj Finserv’s customer care number on Google, X (formerly known as Twitter), or any other social media platform. Contact us on +91-8698010101 or email your query or grievance to wecare@bajajfinserv.in.
  • Do not share sensitive personal information on social media.
  • Do not answer calls from unverified sources declaring themselves as Bajaj Finserv representatives.
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Digital Wallet Fraud Awareness

Digital wallets are gradually replacing traditional offline cash payments. However, you have to be cautious while handling your e-wallet. Digital wallet fraud is an unfortunate reality and can deprive you of your hard-earned money.

Therefore, it is crucial that you take a few precautionary steps to evade such fraudulent attempts.

Dos to stay clear of e-wallet fraud:

  • Transfer money to an acquaintance only.
  • Cross-check the payee details before initiating the transaction through the digital wallet.
  • Set a strong password and protect your e-wallet from falling into the wrong hands.
  • Secure your phone through a face ID, PIN or fingerprint scanner.
  • If you are using the Bajaj Pay Wallet, set a strong login ID and password, and reset the password from time to time.
  • Make the payment when you have a secure and trustworthy internet connection.

Don’ts to prevent e-wallet scams:

  • Do not share your mobile wallet’s login ID, password, PIN or OTP.
  • Do not share or save the digital wallet’s password on third-party websites or applications.
  • Do not transfer funds from your e-wallet to an unverified account.
  • Do not share your personal information on any social media application.
  • Do not respond to calls from unverified sources claiming to be your bank’s representatives.
  • Do not allow an unknown person on call to convince you to download any third-party application.

Digital payment frauds

Digital payment fraud involves exploiting vulnerabilities in online payment systems to unlawfully obtain funds or sensitive information.

The types of digital payment fraud are:

  • Account takeover
  • Payment card fraud
  • Identity theft

are common forms of digital payment fraud, each posing significant risks to users and businesses.
To prevent being falling prey to digital payment fraud follow these methods:

  • Vigilant monitoring of accounts,
  • Strong authentication methods, and
  • Continuous education about fraud tactics
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Payment Gateway Awareness

Bajaj Finserv’s BBPS platform allows you to pay bills for various utilities and services using a credit or debit card, net banking or UPI ID. While accessing the portal, you should be aware of a few aspects, such as not sharing the OTP with a third person.

Cyber fraud awareness is crucial even before you make the payment through a secure gateway.

Dos for payment gateway prevention of frauds

  • Ensure the safety and security of your debit and credit cards.
  • Inform the bank if your credit or debit card gets stolen or is misplaced.
  • Keep tabs on your transactions and monitor your account closely.
  • Opt for SMS notifications on all transactions done through your account.
  • Transfer money only when connected to a reliable internet connection.

Don’ts to avoid payment gateway fraud

  • Do not share confidential information like your card’s number, CVV, card’s expiry date, name of the cardholder or ATM PIN with anyone.
  • Do not note down your ATM PIN anywhere.
  • Do not transfer money without confirming the receiver’s identity.
  • Do not delegate the task of handling the bank account or transferring money to another person.
  • Do not look for Bajaj Finserv’s customer care helpline number on Google, Facebook, X (formerly known as Twitter), or any other social media platform. Contact us on +91-8698010101 or e-mail your query or grievance to wecare@bajajfinserv.in.
  • Do not entrust your details to any stranger on social media platforms.

Benefits of payment fraud awareness

It is very important to be aware of payment frauds and listed are the benefits to being aware of online fraud:

  • Safeguards financial assets, reducing monetary losses.
  • Maintains customer trust by ensuring secure transactions.
  • Early identification of fraudulent activities for timely intervention.
  • Assists in regulatory compliance and meeting industry standards.
  • Provides insights into emerging fraud patterns.
  • Enables proactive measures against evolving threats.
  • Fosters a secure environment, bolstering confidence in digital transactions.

How does fraud happen?

Online fraud can happen in several ways, some of which are mentioned below:

  1. Phishing: Fraudsters may send fraudulent emails, messages, or create fake websites to lure unsuspecting individuals into divulging their personal and financial information.
  2. Scams: Criminals may use fraudulent websites or advertisements to convince people to make payments for products that do not exist or may sell counterfeit goods to unsuspecting individuals.
  3. Identity theft: Fraudsters may obtain personal information from someone online to impersonate or steal their identity.
  4. Hacking: Cybercriminals may hack into online accounts, steal sensitive data like credit card information or personal identification numbers, and use that information for fraudulent purposes.
  5. Malware: Malicious software such as viruses, worms, and Trojan horses can compromise systems and devices, allowing cybercriminals to access sensitive information, steal data, and control the device remotely.

Conclusion

In conclusion, the prevalence of payment fraud in the digital landscape underscores the critical need for heightened awareness and proactive measures to safeguard our financial transactions. By educating ourselves about common fraud tactics, regularly monitoring our accounts, and leveraging the security features offered by financial institutions, we can fortify our defenses against malicious actors seeking to exploit digital payment systems.

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Frequently asked questions

What are the 4 steps to protect yourself against fraud?

You must follow these steps to defend yourself from cyber security attacks.

  1. Keep your sensitive information safe. Do not share your ATM PIN, UPI ID, card’s CVV, or any OTP with a third person.
  2. Keep your smartphone or any other personal device protected with a strong password.
  3. Always verify the authenticity of any website or any person before transferring money. Do not click on any link that appears dubious.
  4. If your debit or credit card is stolen or lost, or you notice any suspicious activity with your account, contact your bank immediately.
What are the three stages of fraud?

The three stages of fraud commonly referred to as the ‘fraud triangle’ include:

  • Opportunity: It alludes to the situation that allows the fraud to occur. For instance, a lack of awareness about cyber security can lead to fraudulent activities.
  • Incentive: It refers to the profit the fraudster stands to make from the act.
  • Rationalisation: It refers to the fraudster’s justification of the act.
How do you handle UPI fraud?

In case of UPI fraud, immediately contact your bank and relay the relevant information without delay.

How can I protect money from UPI fraud?

Protect yourself from UPI frauds in India by following these steps.

  • Do not share your UPI PIN with anyone.
  • Do not disclose the UPI PIN when someone else transfers money to you. You will need the UPI PIN only when transferring money from your account to a receiver’s.
  • Keep your smartphone and other personal devices protected with the help of strong passwords.
  • Do not download/ install the apps shared by unknown person or unknown sources as it may be a malicious app that can steal your OTP, sensitive data or take remote access of your phone. Only official apps should be downloaded from Google Play Store / Appstore.
How do frauds happen?

Frauds occur when you share sensitive and confidential information with any unknown person. The scammers hack into the account and commit the crime. Hence, cyber awareness is essential, and people should be diligent online. The fraudsters are usually successful in deceiving people when they are unaware of the various methods of cyber security hacking.

What is payment fraud prevention?

With the increase in online transactions, payment fraud has also been on the upswing. You can fall victim to fraudulent transactions without proper payment fraud awareness. Cybercriminals use phishing, pagejacking, etc., to steal private information, or cheat netizens through fraudulent transactions. Payment fraud prevention comprises the various steps that you must take to keep your data and account information safe. You can protect yourself from such activities using antivirus software, encrypting transactions, and by updating website tokens and plug-ins.

How do you detect fraudulent payments?

You can prevent fraudulent activities at the outset by detecting the patterns, and identifying the people behind the scams. Businesses can check their buyer’s CVV (Card Verification Value), verify the shipping address and other credentials to prevent fraud. Furthermore, fraudsters are more likely to deal in large transactions once they get hold of your personal data. Thus, setting a maximum expenditure limit on the card, and flagging unallowed transactions can help you detect – and prevent – payment fraud.

What is an online payment fraud?

Online payment fraud refers to deceptive practices aimed at unlawfully acquiring financial information or funds during digital transactions. It encompasses various schemes, including phishing, where fake emails lure users into revealing sensitive data, and spoofed websites that mimic legitimate platforms to steal credentials. Other methods involve malware or skimming techniques to capture payment details. Fraudsters exploit vulnerabilities to siphon funds or make unauthorised purchases. As technology evolves, so do these fraudulent tactics, making it crucial for users to remain vigilant, employing security measures like two-factor authentication and scrutinising transactions.

Why is online payment fraud detection important?

Fraud detection is essential for companies to safeguard their customers’ transactions and accounts by detecting fraud before or as it happens. It is also important for customers to detect frauds in order to protect their sensitive information and not lose money to scams or online fraudsters.

What is considered payment fraud?

Payment fraud refers to any unauthorised or illegal transaction made using a payment method, such as credit cards, debit cards, or online transfers, with the intent to steal funds, sensitive information, or identities. This can include activities like stealing credit card or bank account information, forging checks, or using stolen identity information to make unauthorised transactions.

Where do I report payment fraud?

If you suspect or have been a victim of payment fraud, you should report it to the appropriate authorities. Here are some key contacts:

  • Federal Trade Commission (FTC): You can report fraud online at ReportFraud.ftc.gov or call 1-877-FTC-HELP.
  • Internet Crime Complaint Center (IC3): For internet-related fraud, visit IC3.gov.
  • Local law enforcement: Contact your local police department to file a report.
  • Your bank or financial institution: Notify your bank immediately to secure your accounts and prevent further unauthorised transactions.
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