57% frauds in India in past 2 years related to digital platforms: PwC report

More than half of all fraud incidents in India in the past two years were “platform frauds”, a PwC India report revealed on Thursday (May 11). Platform fraud is a novel form of economic crime that involves fraudulent activities associated with social media, e-commerce, enterprise, and fintech platforms.

The onset of the pandemic led to an increase in platform fraud, said the second edition of PwC’s Global Economic Crime and Fraud Survey 2022: India Insights, titled Platforms: The new frontier of fraud in India.

“The surge in remote work, e-commerce, delivery applications and contactless payments has further contributed to the rise of this type of fraud. 57 per cent of all fraud incidents in India were platform fraud,” it said.

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111 organisations surveyed

It further said more than 26 per cent of Indian organisations lost over $1 million due to platform fraud, and 44 per cent of the perpetrators were found to commit fraud for financial gain.

PwC said it surveyed 111 organisations across India from diverse industries such as technology, financial services, banking and capital markets, consumer products and retail, education, and healthcare.

Puneet Garkhel, Partner and Leader, Forensics Services, PwC India, said Indian consumers and organisations have been rapidly embracing new platforms over the past few years.

“On average, an Indian company operates with five different platforms as part of its regular business activities today. The emergence of and surge in e-commerce, contactless payments, home delivery models, remote working, etc., have not only led to various platform-based innovations but also opened avenues of entry for fraudsters,” he said.

Organisations need to be cognizant of these evolving threats and adequately invest in fraud prevention and detection strategies to safeguard themselves, Garkhel added.

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Internal perpetrators

The report said four out of every 10 platform frauds in India were conducted by internal perpetrators.

Moreover, 26 per cent of platform frauds involved collusion between internal actors and external perpetrators, it said, and added that this implies that if companies have stronger internal controls in place, over two-thirds of all platform frauds can be mitigated.

The report says that financial frauds on transactions made to or from platforms accounted for 89 per cent of all platform frauds. These frauds vary from basic unauthorised digital purchases to more complex identity theft and triangulation fraud.

Furthermore, payment fraud, particularly through credit cards and digital wallets, accounted for 92 per cent of all customer frauds in India.

(With agency inputs)