Topics on Credit / Debit / Banking Crime that can help for an Informed Decision.

BANKING CYBER CRIME: Because money is the root of all evil!

There is not a single person today who does not have a bank account, thanks to the introduction of schemes and policies people can now open zero balance accounts. Mobile banking, online transactions, ATMs, credit cards and transactions through mobile applications like PayTM, mCent, FreeCharge etc, are becoming increasingly common these days.

There is no denying the ease of access and convenience online methods of payment have brought in the lives of people. The problem arises when delinquents get attracted and commit crimes, by violating the privacy of account holders. Although banks use highly secure systems for banking activities and ATMs, secure servers for online banking transactions, criminals somehow find a breach in their systems and cause huge losses to banks as well the account holders. Even reliable and password/PIN protected cards and transactions are vulnerable. 

Banking crimes constitute that part of ‘Cyber Crime’, wherein the target of a criminal is to rob an innocent person or a bank, off their money using hacking methods, breaching security systems, gateways, etc. Criminals employ different means to commit a banking crime, the most common of them are-


Submit your legal query & get the best solution by experts.


India is rapidly moving towards complete digitalisation. The usage of ATMs and Cards to make payments has drastically increased with more people opening bank accounts and using advanced payment methods. Due to the convenience and ease of use, people are more inclined towards using plastic money to make transactions however, this has also led to an increase in the number of card frauds. There are many tactics which these card frauds may use to deceive you, some of the most common of them are listed below-

Shoulder surfing - An over-friendly bystander who offers his help when your ATM card gets stuck in the machine or someone trying to oversee your PIN number, may be a criminal and can try to steal your card or information. 

Skimming and cloning - The card readers detect the chip and magnetic strip that contains your bank information from your card when you insert it. The card thieves plant a device in the card reader to read your sensitive bank information and transfer money to virtual or fake cards or make unauthorised payments.!

Fake keypad – Have you ever experienced that once you typed in your secret pin in an ATM or card reading machine, the machine did not respond and you thought it was malfunctioning, but the money was nonetheless withdrawn from your account? This may happen since these hackers put fake keypads on the machine that copy and save your PIN. 

Phishing – Do you really believe it when strangers, who claim to have tonnes of wealth, offers you to inherit their assets, sitting thousands of miles away having no connection to them whatsoever? This is spam- just to dupe you. The sender of such email asks you to share your card details with them so he can transfer the money- from your account to his own.

Pharming – When you’re directed to a fake website, by giving a false impression of it being the original one, and you enter your card details therein, you might just invite trouble for yourself.

Unsafe apps/ software – Purchasing and downloading those applications and software whose author or source is unknown, is highly likely to rob you off your money without delivering the promised application or software.

Credit cards, debit cards and ATM cards collectively fall under plastic money. Undoubtedly, plastic money has made our life much simpler. One does not have to undergo the hassle of carrying around bulky bundles of currency notes. And after the recent demonetisation, people are becoming more inclined towards using cards or net banking instead of paper currency.  Transactions hardly take time and the monotony of counting the value equivalent to the notes is omitted.

However due to the increasing trend of using plastic money, e- theft is also rising. Hackers have found new ways of fraudulently withdrawing money from the owner’s account. This has become a global menace. In fact, many people do not completely understand the working of this form of payment and are one of the easiest victims.

But to overcome this problem and to keep up with the demand of plastic money, banks are trying to improve their security features.

  1. The introduction of One Time Password (OTP) is one of them. Every time a user does an online transaction, an OTP is generated and sent to the card holder’s mobile number which is used for verifying the user. Fraudsters have however started cloning sim cards, making this an inefficient security system.
  2. Banks are now trying to develop a more secure method by introducing biometrics procedure and facial/ retinal recognition or fingerprint recognition to authenticate the user at ATMs. This will take some time, but steps are being taken to move towards a safer form of transactions.

Therefore in the current scenario, plastic money is not a very safe option unless an absolute security system is developed to protect transactions without any loopholes. Our Prime Minister, Narendra Modi too is ambitious about seeing a digital India. But the real question is how feasible is this and how long will it take?

Whenever a new security system or tool is devised, the hacking society works tooth and nail to create new hacks to counter and breach it. Banking crimes in terms of cyber crimes have been increasing manifolds and multiple countries have enacted exclusive laws to recognise and criminalise them.  Some of the most common types of Banking Cyber Crimes are - 

1.    Internet Banking Fraud: Fraud means any dishonest act to gain undue advantage. With the increasing use of Internet banking, fraud within it is a common phenomenon these days. The victim (the account holder with the bank) suffers loss when a fraud is committed by the perpetrator where his bank information is stolen and the thief launders the victim’s money.  Many sections of the Indian Penal Code, 1860, deal with fraud under the different heads of forgery, concealment, breach of trust etc. 

2.   Identity Theft: It is yet another way of gaining banking benefits by impersonating to be someone else with a bank account, in order to access the bank details or by creating an altogether new identity.

3.   Phishing: When a person sends an email to a user in order to scam him and use his private information for his own benefit, is known as phishing. Most email service providers such as Gmail, Yahoo, etc. have made various attempts to classify these emails as “spam”, but perpetrators have found ways around it too. Acting as bank officers or government officials, these thieves send fake emails to their victims to extract personal information.

4.   Forgery: Faking a person’s signature in order to make withdrawal of cash through cheque from a bank account.

5.   Credit/Debit Card fraud: Thieves use a person’s to credit/debit/ATM cards to withdraw money or make illegal transactions. 

6.   Bank Impersonation: Where one or more individuals act as a financial institution, often by setting up fake companies to lure people into depositing funds. There are enough and more number of Bollywood movies made on this type of crime. 

A living case is of Mr. Frank Abagnale Jr. who before his 19th birthday diverted millions of money into his account by forging checks and creating new identities. He posed as a Pan Am pilot, a doctor and a lawyer to fulfil his motives. The fact that even a 19 year old was able to easily fool so many authorities multiple times, shows that banking crimes have been increasing at an alarming rate.

In case of a card fraud, the following steps should be taken by the user(victim):

  1. The most immediate step is to inform the bank issuing the card. There 2are methods like email, fax, IVRS or calling on the toll-free number provided. The bank generally responds by blocking the card or freezing the account that has been compromised. Now, a person can even block cards associated with his bank account through internet banking.
  2. If the bank doesn’t respond, the victim can approach the Banking Ombudsman through a letter or email.
  3. One must also report to the police about the loss of card or compromise of the security of the account. The police can start their investigations under various sections of the Information Technology Act, 2000 and the Indian Penal Code to nab the wrongdoer.
  4. A lawyer can also be of help in reporting to the Adjudicating officer as appointed under the Information Technology Act. Also, a lawyer can help determine the liability of a bank that led to compromise of an account holder’s privacy due to lack of adequate security measures in place.
  5. Once the wrongdoer has been nabbed, a lawyer will be helpful in preparing the case of a victim in asserting that the compromise of his password is not his fault was not his fault and he had taken enough precautions on his side.

Like any other fraud, Banking Fraud is also a criminal offence and the perpetrator of the same can be penalised for the same in compliance to provisions under the Indian Penal Code and the Information Technology Act, 2000