Employee fraud or data leak? How a credit card holder got lured by an upgrade promise, and ways to protect yourself

Banking frauds are becoming increasingly common and innovative.

The Bengaluru Police said on October 15 that it had arrested eight people, including a manager and three sales executives of Axis Bank in connection with a racket promising hefty returns through stock investments. This fraud is said to have occurred at the bank’s Nagarabhavi branch in West Bengaluru. Fraudulent transactions amounting to Rs 97 crore were carried out through six bank accounts opened by the bank staff.

This is typically known as an employee fraud, where the deception is carried out by people within the organisation concerned. There are many instances and variations of this kind of scam. One such is the credit card fraud, which Bengaluru-based Shanti was a victim of. She believes that it was an employee fraud in her case as well.

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Laying the trap

Shanti has a history of high credit card spends and was being chased by her bank (first a phone call, followed by a few emails) to upgrade her card to the most exclusive card at the bank. Except that this card came with a very high joining fee. The bank was providing shopping vouchers to compensate for the joining fees but Shanti wasn’t interested in these and felt the fee was too high. For months, a set of employees followed up with her and she finally agreed to upgrade the card only when they offered the card at a very low joining fee but minus the vouchers. One of the people who was in touch with her over this credit card upgrade even shared a visiting card.

For the upgrade, they sent her an email confirming her wish to upgrade, for which she replied with a confirmation. She did not, at any point, share any information like card number with the bank employees.

After a few days, she received a string of messages on her phone on expenses made online to the tune of Rs 1 lakh. Further, the messages on her phone came five hours after the transactions had been done. While she blocked the card and raised a dispute, she was flummoxed as to how the fraud could happen.

This may be a case of employee fraud since she had not given out any sensitive information to anybody and these frauds took place soon after sending an email confirming the upgrade request. Or it could have arisen from a data leak. While she has received a temporary credit for the disputed transactions, Shanti is still waiting to hear back from the bank (despite writing to the nodal officer) on her employee fraud complaint.

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How to protect yourself

Banking frauds are becoming increasingly common and innovative. Even though common deception methods like asking for sensitive information (CVV) or calls purportedly from the customs or income tax departments are still prevalent, newer ways of cheating are coming up. And the fraudster could be an external party or an internal employee.  Here are a few simple steps to keep oneself safe.

• Do not transact over phone or email. Irrespective of the caller being genuine or an impostor, transact only through official banking channels like online web portal or call centre. Given that one doesn’t have a way to assess the authenticity of a phone call, it is better to be extra cautious in such instances. Even if the caller is known or felt to be bona fide, hear them out but transact only through online/phone banking.
• If you have been approached for a credit card upgrade, it’s best to call up your bank call centre and verify this against your profile. If you have indeed been offered a card upgrade, your bank would have a record of it, mapped to your profile. This is easily verifiable. When Shanti called up the bank to check, the bank call centre confirmed that there was no upgrade offer made to her. That means that the upgrade phone calls made to her earlier (and all those emails) were spurious.
• Keep the bank's mobile app on the phone only if transacting often. For most individuals, transactions will be limited and a phone app is more of a convenience than a necessity. Logging in online for the transactions will just take a couple of minutes more than accessing via the app.
• As in Shanti’s case, even if details like card number, CVV, etc, are not being asked for but only a phone/email confirmation is being sought, do not provide the same.
• Do not sign blank forms. It is a common practice to get customers to sign blank forms and the representative fills them. This is fraught with risk as there could be misinformation provided. Customers should read the terms and conditions and fill out all forms themselves before signing them.
• Constantly monitor communication from banks on debits, account statements, etc. There is a tendency to ignore these messages. It is important to check every message to ensure things are going right. Sometimes, there could be two consecutive tap payments or small debits from the account that go unnoticed.

The writer is Financial Educator, Money Mentor and Founder of Finsafe India.

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