Cyber frauds: How are money mule scams impacting India's financial inclusion efforts?

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India's first-world digital infrastructure and financial inclusion, which has brought access to digital banking, payments, health, and credit services to almost 500 million people, are widely acknowledged. However, this technological progress has also led to a new threat: cyber fraud. India now ranks among the largest victims and perpetrators of cyber fraud worldwide.

A 400% increase in payment frauds, cases where 125 young boys are collectively duped out of ₹1 crore, life savings lost to phishing fraud, and credit scores plunging due to fake credit fraud — these are some of the headlines we are unfortunately becoming accustomed to. Cyber fraud is burgeoning into a digital pandemic that doesn't discriminate.

Also Read: 6 ways to protect yourself from cyber fraud threats

In a country where 60% of the population lives on less than $3 a day, any scale of cyber fraud poses life-changing consequences for the victims.

Cyber fraud manifests in several ways, but one insidious practice is money mule fraud. This scam exploits individuals, often from low-income backgrounds or facing financial hardships, by luring them into unwittingly facilitating money laundering activities. The consequences are devastating, with victims facing not only financial losses but also blocked accounts, legal actions, and a damaged credit history, leading to financial exclusion.

Often, the unwitting victims are not even aware of the nefarious activities taking place through accounts opened and transactions done in their name. Today, for less than 50 rupees, one can buy someone's real identity from several social platforms and chat groups. This allows a fraudster to obtain credit and payments in someone’s name, deposit them in another victim’s bank