Account takeovers, mule accounts leading cause of bank frauds in India

Account takeovers represent more than half of all banking fraud cases in India, with third-party account takeovers accounting for around 55 per cent frauds, much higher than social engineering scams which are the leading cause of fraud in some other countries.

Further, there has been a concerning bump in mule accounts in India, in line with the growing global threat, as per a report by global digital fraud detection company BioCatch, which uses behavioral biometric intelligence. However, what is more concerning is that most of these accounts go unreported.

“The prevalence of mule accounts potentially represents the most under-the-radar trend in the entire fraud space,” BioCatch Director of Global Fraud Intelligence Tom Peacock said.

‘Tip of the iceberg’

The report on Digital Banking Fraud Trends in India, the company’s first-ever report on a single nation, analysed more than 35 crore sessions in December 2023 alone. It added that at one partner bank, nine out of every ten mule accounts went undetected, and every device found to participate in mule activity across banks logged into an average of 35 accounts each.

“The mule accounts banks succeed in identifying almost certainly represent just the tip of the iceberg. Indian financial institutions must employ more robust security measures to both detect and then shut down these sprawling mule networks,” Peacock said. 

Further, most of these mule accounts are being accessed from outside India. While 86 per cent of the first session of documented mule account activity came from within India, after a month that number fell to 20 per cent, of which 16 per cent used a VPN.

Most mule activity at 14 per cent of the total, was seen in Bhubaneswar followed by Lucknow and Navi Mumbai for 3.4 per cent each. Mumbai was 2.2 per cent, Bengaluru at 1.8 per cent, and Cuttack at 1.6 per cent.

The report highlighted the urgency with which Indian banks need to bolster their fraud defenses.

“The fraud threats are a mix of both common threats seen globally and unique threats we find only in this region,” BioCatch’s APAC Vice President of Sales Richard Booth said. “Our India report provides much-needed intel, and hopefully spurs these banks to rapidly adopt advanced defenses to stay ahead of a ceaselessly innovating group of fraudsters and criminals operating domestically and around the globe.”