The onset of the pandemic has led to an increase in platform fraud that involves fraudulent activities associated with social media, e-commerce, enterprise and fintech platforms, according to the latest report by PwC India. Titled as 'Platforms: The new frontier of fraud in India,' the report says the surge in remote work, aided by the increased use of e-commerce, delivery and contactless payment applications has led to the rise in fraudulent activities in the country, of which platform frauds account for 57% of such activities. Terming platform fraud as a novel economic crime, the report says more than 26% of Indian organisations lost over $1 million due to platform fraud.
The survey was conducted across 111 organisations across, of which half of the companies had a turnover of more than $1 billion. Amongst the surveyed firms, 40% of organisations lost between $50,000-$1,00,000 due to platform frauds. As many as 17% of the surveyed lost between $1 million to $50 million, whereas 5% of organisations incurred a loss of $50 million and above due to platform fraud.
"During the pandemic, Indian consumers and organisations were quick to adopt new platforms. Today, an average Indian company operates five platforms in the normal course of business. As a result, the incidence of platform fraud is a lot higher in India," says Puneet Garkhel, Partner-Risk Consulting and Leader-Forensic Services.
Enterprise platforms are a prime target for malware, phishing, money laundering and ransomware. Financial frauds on transactions made to or from platforms accounted for 89% of all platform frauds. Payment fraud, particularly through credit cards and digital wallets, accounted for 92% of all customer frauds in India.
According to the report, 99% of fraud incidents in the past 24 months have been on platforms such as financial, social media, goods, enterprises, media sharing, knowledge sharing and services. Economic crime and fraud continue to be a significant challenge for Indian companies, with 66% of organisations experiencing at least one form of economic crime in the past two years.
Amongst the motives identified for platform fraud, financial gain is the most prevalent, with 44% of perpetrators in India engaging in such activities for monetary reasons. Brand damage is another common motive cited by 32% of the surveyed organisations, followed by competitive advantage at 21%.
"Indian consumers and organisations have been rapidly embracing new platforms over the past few years. On average, an Indian company operates with five different platforms as part of its regular business activities today. The emergence of and surge in e-commerce, contactless payments, home delivery models, remote working, etc., have not only led to various platform-based innovations but also opened avenues of entry for fraudsters. Organisations need to be cognizant of these evolving threats and adequately invest in fraud prevention and detection strategies to safeguard themselves," Garkhel says.
