Summary of this article
Scams exploit human behavior, not just technological or system flaws.
Early detection, behavioral monitoring, and cross-industry intelligence prevent losses.
Consumer awareness and cautious verification reduce scam success significantly.
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.
Timing Is Everything
Early detection is the key. Institutions that recognize early warning signs as they appear in real time across multiple channels can prevent potential losses.
Prioritizing Behavior over transactions: Manipulation unfolds across conversations, messages, and social pressure long before money moves. Individual signals may seem ambiguous, but collectively, they reveal patterns of urgency and unusual behavior. Behavioral monitoring and decision-making tools enable institutions to adopt proactive measures instead of awaiting transaction occurrences.
Cross-industry intelligence: Banks need a coordinated approach. They can combine payment data with communication signs - unusual call volumes, recurrent contact from new numbers, or lengthy calls right before a transaction; Partnering with telecoms providers makes this possible. Even if a transaction looks normal on the surface, these patterns can reveal when users are at risk, giving institutions a chance to act before harm occurs.
Educating Consumers: Scammers get their power from momentum – they push, count on instinct, and trigger anxiety. But it can be stopped through questions or by verifying the source. With digital payments and online interactions becoming routine, even a brief pause can make a difference between being a victim and staying in control.
The future of scam prevention lies before the ‘send’ or ‘confirm’ button is clicked; pre-transaction intervention must come into play over post-transaction recovery. With a collaborative, layered approach, institutions can still restore trust.
(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)
