India’s Scam Problem: How 5 Common Scams Exploit Human Behaviour, Not Technology

By Vishal Goyal, Country Manager for South Asia, FICO

For years, scam risk was either seen as a systems problem or something that happened outside the bank.

Criminals stole credentials, breached systems, and hacked transactions. Only in the aftermath would institutions be able to detect and recover funds. With scams becoming more sophisticated, this approach has widened the vulnerability gap for institutions and consumers.

2024 saw losses from digital scams and cyber fraud exceeding Rs 22,800 crore, with figures for the first half of FY 2025–26 already approaching the same level. The scale at which the numbers are rising is concerning, but the real lesson lies in understanding why.

Today, many scams succeed not because systems fail, but because customers are persuaded to act. Payments are often repeatedly authorised under coercion or pressure. Accounts are opened or repurposed. Funds are moved and often repeatedly under pressure. By the time certainty arrives, the damage has been done.

Five scams. One institutional challenge.

India’s scam problem is often discussed through individual narratives. Victims aren’t convinced that they’re making a mistake; they are led to believe they are acting prudently. Here are five scams that prey on human vulnerabilities rather than technology flaws:

1. UPI scams go after convenience: With digital payments becoming the norm, convenience takes precedence. Scammers have realized this. They depend on us being predictable. Even where there are warning signs, the simplicity with which UPI transactions are carried out creates routine bias and clouds judgment. Victims are tricked into verifying transactions, scanning QR codes, or inputting PINs on identical platforms.

2. Digital arrest scams play on the fear of authority: For most people, Law enforcement carries a weight. By pretending to be police or government officials, scammers threaten legal consequences to pressure victims into compliance. They use people's fear of authority to isolate and trap them in video calls, where victims have to provide money to fake "verified" accounts. Manipulation and urgency take over judgment and force the victim to act before they can get help.

3. KYC suspension scams capitalise on compliance anxiety: Most of us have received message warnings on bank accounts being frozen due to incomplete Know Your Customer (KYC) details. KYC suspension scams feed on the fear of non-compliance, particularly in response to the revised regulations. Victims are made to update their KYC through a link, and while doing so, are forced to share OTPs, credentials, or install screen-sharing software. When it comes to something as personal as a bank account, scammers make people believe they are doing the right thing, even as they are being deceived.

4. Credit Card Scams prey on financial loss: Most people are often more driven to avoid losing money than gaining it, and scammers have realised this. By highlighting unusual charges, scammers trigger anxiety and rush victims into sharing OTPs or card details. As a result, victims end up authorising the fraud themselves. Beyond individual losses, the damage erodes confidence in card payments and shows how the instinct to protect outweighs caution.

5. Dormant Account Reactivation schemes play on the promise of a windfall: In contrast with the above scam, scammers draw victims in under the possibility of money waiting to be claimed, such as overlooked deposits. Even an insignificant amount of hope lowers our guard, and victims are deceived into sharing personal information, clicking on links, or paying fees.

In each of these cases, the scam happens through a series of choices that seem real. Because the action looks regular at every step, this move toward authorized deception is changing the economics of financial crime. As a result, banks cannot rely on traditional detection models alone.