Consumer loans in India face the highest incidence of fraud followed by credit cards, according to a report by credit information company Experian.
The most common type of fraud is identity theft — the share of which has been growing.
“Identity theft/fictitious identity cases continue to contribute around three-fourth of all detected fraud cases. The category has observed a rise from 75 per cent in Q1 2014 to 77 per cent of fraud cases as at Q1 2015,” according to the report, titled ‘Fraud Report 2016- Retail Banking, India’.
“Consumer loans continue to have the highest fraud incidence rate across all products. The number of fraudulent cases for these loans has increased annually from 219 frauds detected per 10,000 cases in Q1 2014, to 265 cases per 10,000 as at Q1 2015.
Credit Card is the second most targeted product by fraudsters after consumer loans.
The number of fraudulent card applications has increased annually, from 65 frauds detected per 10,000 cases in Q1 2014, to 75 cases per 10,000 as at Q1 2015,” said Mohan Jayaraman, Managing Director, Experian India.
Identity fraudThe Income Tax Department has also taken note of the rise in fraud cases, particularly identity fraud cases, and recently issued a notification urging taxpayers to never divulge sensitive information over email or SMS. “The nature of identity theft has changed in today’s world with the proliferation of mobile devices and online platforms. Identity theft incidents have escalated due to negligent smartphone security and publicly displayed personal information on social media sites,” Mr. Jayaraman said.
Auto loans are another area that have seen a rise in the incidence of fraud, according to the report.
The number of fraud cases to do with auto loans rose from 39 per 10,000 cases in Q1 2014 to 46 in Q1 2015. Identity theft is more rampant in the auto loan sector, with identity theft making up 85 per cent of all auto loan frauds.
AadhaarThe most common means of fraud in these identity theft cases is falsifying address proof or contact information.
“The recommendation made by the RBI to link all credit accounts to a biometric identification such as the Aadhaar will help creditors and lenders verify their borrower’s details including their contact information and past utilisation of credit.,” said Mr. Jayaraman.