Online financial frauds surge in Maharashtra; recovery remains low

There has been an alarming rise in the amount defrauded in online financial crimes in Maharashtra yet the recovery rate across the state remains critically low Between 2016 and 2024 online financial crimes including debitcredit card fraud SIM swap scams business email compromises internet banking fraud identity theft online loan app frauds cryptocurrency scams and various other digital frauds have caused staggering financial losses running into thousands of crores of rupeesRecovery rate below 137An analysis of recovery data over these nine years paints a worrying picture while the volume and value of fraud have surged dramatically the percentage of recovered funds remains minimal and inconsistent fluctuating between a high of 619 per cent in 2022 and a low of just 028 per cent in 2024Despite the growth in digital transactions and financial inclusion the average recovery rate hovers below 3 per cent exposing massive gaps in fraud detection investigation and fund restitution mechanisms The steep decline in recovery rates in recent years highlights growing challenges posed by sophisticated cybercriminal tactics and the rapid pace at which funds vanish in online ecosystemsWidening gapThe widening gap between rising fraud losses and meagre recovery rates undermines public confidence in digital financial services and threatens the stability of the digital economyOnline financial crimes have become smarter faster and more diverse over the past decade The rise of digital platforms advanced criminal tools slow regulatory adaptation and low public awareness have created a perfect environment for such frauds to thrive Cyber experts stress that without urgent improvements in fraud detection legal response and public education the gap between fraud and recovery will continue to widen putting the digital economy and public trust at serious riskPolice speakldquoThe expansion of internet banking UPI mobile wallets and digital lending platforms has opened up new channels for financial activity While this has improved convenience it has also created more entry points for fraudstersrdquo said an officer attached to the Cyber Cell of Mumbai policeldquoTechnologies like UPI instant transfers and cryptocurrencies allow money to move in seconds often across borders Even if the FIR is registered banks often cannot react fast enough to freeze or trace these transactions This leads to extremely low recovery rates even if the fraud is reported promptlyrdquo the officer addedSpeaking about other reasons behind the low recovery rate another officer from the Cyber Cell of Maharashtra Police said ldquoMany fraud operations are now run by foreign syndicates using international phone numbers VPNs and shell companies In such crossborder crimes stolen money is quickly converted into cryptordquoWithout a strong specialised cybercrime workforce law enforcement will remain reactive while cybercriminals continue to exploit the system ldquoBuilding this capacity is not optional it is a critical need for national security economic stability and public trust in the digital ecosystemrdquo said cyber expert Ritesh BhatiaA senior officer from the Mumbai Crime Branch told midday ldquoUnless legal processes to reverse fraudulent transactions are made faster recovery rates will always remain abysmally low We strive to train cybercrime investigators to effectively handle the growing volume and complexity of digital fraud casesrdquoMany cybercrime units in police departments remain underresourced with limited personnel outdated tools and a lack of specialized training said a techsavvy youth working closely with law enforcement agencies ldquoAs a result investigations are often delayed evidence is lost and recovery of stolen funds becomes nearly impossiblerdquo said the youth requesting anonymityGautam Mengle assistant vice president and security awareness strategist at CyberFrat said ldquoThere are many reasons for the gap between lost money and recovery and they involve all stakeholders For one victims often donrsquot realise that lost money can be recovered if a complaint is filed before the fraudster withdraws the funds If reported promptly on the National Cybercrime Reporting Portal transactions can be frozen and reversed in coordination with both banks Despite nearly R1 crore being recovered every year through this process many victims lose precious time trying to call scammers or gather evidence or decide to lsquovisit the police station the next dayrsquo That delay is a massive blowrdquoldquoSecondly cybercriminals have evolved Previously gangs created bank accounts with forged identities and sold them to criminals Last year scammers immediately used stolen money to purchase expensive gadgets or jewellery for resale Once the proceeds are spent recovery becomes harderrdquo Mengle told middayldquoFinally the dark web has made it easier for even amateur scammers to collaborate with experts In gamebased scams involving fake betting apps scammers receive money through their own unregulated payment gateways much like SIM box rackets that acted as parallel telephone exchanges to evade chargesrdquo he added ldquoClearly the lapses are on all sides Proactive awareness and continuous efforts to flag and fix gaps in the system are essentialrdquo said Mengle from CyberFrat a Mumbaibased firm specialising in cybersecurity awareness education and advisoryOver the last decade a wide range of evolving online financial crimes have emerged Among the most alarming are matrimonial frauds where scammers exploit dating and marriage platforms to build fake relationships and extort money Loan app scams have surged with fake platforms offering instant loans and then harassing victims for repayment QR code scan frauds trick users into scanning malicious codes that instantly siphon funds from accounts Sextortion cryptocurrency investment scams and ransomware attacks all have added layers of complexity and trauma affecting victims financially and emotionallyldquoOne major reason cybercrime recovery remains low is the growing use of mule accounts bank accounts rented by individuals to scammers often in exchange for commissions Many people in financial distress are lured by social media ads promising passive income or freelance work These users unknowingly become part of money laundering networksrdquo said Indorebased cyber researcher Ketan Raikwar who tracks rigged betting apps and mule accountsldquoScammers prefer corporate accounts for their high transaction limits A single stolen sum can pass through a dozen mule accounts within minutes making it untraceable By the time fraud is reported the money is often withdrawn turned into crypto or routed abroadrdquo said Raikwar who works with the MP Cyber PoliceldquoWhat worsens the situation is how easy it is for scammers to find account holders willing to rent out their details College students job seekers and small business owners are approached on Telegram WhatsApp and job portals Since initial transactions seem legitimate banks donrsquot flag them When the scam is uncovered recovery becomes a game of catchup that law enforcement rarely winsrdquo he addedCyber lawyer Puneet Bhasin said ldquoThis is not just a problem of the judiciary or Maharashtra police It also involves banks and in some cases their employees who open mule accounts without proper KYC checks Despite favourable court orders and police notices banks often delay or refuse to freeze fraud proceeds Wersquore filing contempt petitions to make them accountable Cybercriminals know these systemic flaws and exploit themrdquoBhatia added ldquoThe speed at which cybercriminals move money makes tracing it extremely difficult Even if reported in time the funds are often laundered through multiple accounts sometimes internationally Banks also fail to act fast enoughrdquoldquoTherersquos a major gap in coordination between banks and cyber police Legal red tape and internal delays prevent immediate action A realtime alert and response system between financial institutions and law enforcement is crucialrdquo he said ldquoFinally many cybercrime units suffer from inadequate training frequent officer transfers and too few specialised stations Basic cyber training isnrsquot enough for todayrsquos complex financial frauds Dedicated teams with advanced training and stable postings are essentialrdquo Bhatia saidAs cybercriminals grow smarter and faster law enforcement and financial institutions must evolve at the same pace Legal reforms better training rapid interagency coordination and stronger public awareness are vital Without urgent and sustained intervention the gap between money lost and recovered will only widen placing millions of citizens and crores of digital transactions at constant risk