New tech has led to increase in fraudulent apps & mis-selling: RBI
RBI) on Monday said that emerging technology has led to proliferation of fraudulent apps and mis-selling. Fintech firms still face significant challenges in counterparty credit risk assessment despite significant footprint expansion, the central bank said in its report on currency and finance.
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"Digitalisation presents challenges related to cybersecurity, data privacy, data bias, vendor and third-party risks, and customer protection," RBI Governor Shaktikanta Das wrote in the foreword to the report. «Additionally, emerging technologies can introduce complex products and business models with risks that users may not fully understand, including the proliferation of fraudulent apps and mis-selling through dark patterns.»
Dark patterns refer to deceptive practices that are designed to mislead users to do something they originally did not intend to do. Examples include compelling users to perform unrelated actions to proceed with intended purchases and creating a false sense of urgency to mislead users into making quick purchases.
The regulator also said that a large portion of the population lacks a formal credit history, making traditional scoring models less reliable.
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Das added that regulatory and supervisory frameworks will have to scale up and become
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