The white paper discusses a set of solutions for the ecosystem of actors to consider in tackling and curbing the illegitimate activity of scamsters and other fraudulent actors over the very popular Unified Payments Interface (UPI) of India. Scams over UPI involve accessing sensitive user information like security PINs or tricking users into making transactions either peer-to-peer, over UPI apps, or over one or more digital platforms that offer UPI as a payment method, in addition to those where scamsters exploit system vulnerabilities and target users’ funds. Where users, knowingly or unknowingly authorise transactions to unintended parties due to deceit, manipulation, or system vulnerabilities, are referred to as Authorised but Unintended (AbU) transactions in this white paper, and many scams involve AbU transactions. AbU scams are a subset of a universe of ever-changing modus operandi that law enforcement agencies, banks, third-party app providers and online marketplaces have to deal with.
This white paper details specific vulnerabilities at both product and system levels and recommends a multifaceted approach to mitigate risks, including user education, regulatory interventions, and technological innovations to safeguard users against scams. However, the key proposal is in establishing a Comprehensive Fraud Reporting and Management System (CFRMS) to facilitate efficient fraud reporting, investigation, and management (thought of as a stylised case for UPI alone but can be extended to encompass other payments systems as well). The proposed CFRMS optimises for three system-level opportunities:
- Back-end coordination between all UPI-related scam reporting channels available to customers,
- Identifying and collecting common data points as part of the Minimum Viable Information (MVI) by all scam reporting channels, which can then be used for verification of incoming complaints, and,
- Providing visibility of the MVI collected by different channels to all other reporting channels and using these for intelligence creation and triggering of proportionate enforcement actions to mitigate UPI-related scams.
UPI is not only a valuable national asset, but an emerging global leader in digital payments infrastructure. Through this white paper, we aim to catalyse a dialogue among policymakers, industry stakeholders, and the public to strengthen the UPI ecosystem against the evolving threat of retail financial scams. We hope that actions taken in this regard will set a new standard of ambition for protecting Indian citizens engaging in authentic transactions and also find replication across countries that desire low-cost and secure digital payments at scale for their citizens.
The full report is accessible here.
