Identity Theft via KYC Fraud: How to Stay Protected

When you create an account with banks or financial institutions, they require you to verify your identity. This is done through a KYC Process that involves submitting documents like Aadhaar, PAN or other RBI-approved documents.

Today, financial institutions carry out this verification process through “Digital KYC”. Digital KYC involves capturing live photos of the customer and their documents or proof of possession of Aadhaar, where offline verification cannot be carried out.

What is Identity Theft via KYC Fraud?

In KYC identity theft, fraudsters steal your personal information or create fake identities and use them to complete the KYC process fraudulently. Once verified, they gain unauthorized access to your accounts or use your KYC to open a new  account, take loans and credit cards in your name, leading to financial loss and reputational damage.

In today’s digital world, identity theft has become a major threat, especially when fraudsters use stolen or fake documents to complete KYC procedures and take control of your accounts. 

There are multiple scenarios in which identity theft can occur

Scenario 1: Fraudsters can steal your personal identity information through various phishing methods. They often misuse this information to access your accounts and make unauthorized transactions.

Arjun was approached by a fraudster who promised attractive investment returns. To proceed, Arjun was asked to verify personal details. Trusting the fraudster, he shared his account credentials and OTPs believing his investments would be managed securely. Using this stolen information, the fraudster accessed Arjun’s account and made unauthorized transactions.

Scenario 2: Fraudsters may ask you to complete the KYC process to gain access to your account. Once the information is available with them they will take full control of your account and misuse it.

Rohini was approached by a fraudster who claimed to offer assistance in securing benefits under a government subsidy scheme. The fraudster asked her to create an account and complete KYC verification, claiming it was required to receive the subsidy. Trusting the fraudster, Rohini submitted her personal details. Once the fraudster had access to Rohini’s KYC information, they took full control of the account and misused it for unauthorized transactions, resulting in financial loss to Rohini.

Scenario 3: Fraudsters may trick you into completing the KYC process for an account that isn’t yours. After that, they misuse the account for fraudulent activities without your knowledge

David was contacted by a fraudster who promised to help him secure a loan. The fraudster asked David to complete the KYC process on an account that had already been created in the fraudster’s name, not David’s. Believing it was a legitimate part of the loan application process, David complied. He submitted his personal details for KYC, unknowingly giving the fraudster full control of the account. The fraudster then misused the account for fraudulent loan transactions, leaving David unaware and at significant risk.

Common Red Flags of KYC Fraud and Account Takeover

• Unexpected calls or emails about account opening you didn’t request.
• Alerts or SMS notifications for transactions you didn’t authorize.
• Receiving bills or credit cards you never applied for.
• Difficulty accessing your bank or financial accounts.
• Offers that sound too good to be true and trick people by stealing their identity.

How to Protect Yourself from Identity Theft and KYC Fraud

• Secure Your Personal Information: Never share sensitive documents or OTPs over phone, email or messaging apps.
  
• Be Vigilant of Phishing Attempts: Avoid clicking on suspicious links or sharing info on untrusted websites.
  
• Regularly Monitor Your Accounts: Check bank statements, credit reports, and account activity for any unauthorized access.
  
• Use Strong Authentication: Enable two-factor authentication (2FA) wherever possible.
  
• Verify Communication: If contacted unexpectedly by financial institutions, verify their identity via official contact channels.
  
• Report misused Documents Immediately: If your ID proofs are misused, report to relevant authorities and institutions.
  
• Use Official KYC Channels Only: Complete KYC through official websites or verified agents.

What to do if your identity information has been misused on any PhonePe account

If you suspect fraud or have been scammed through PhonePe, act quickly by raising the issue through any of the following channels:

1. PhonePe Customer Care Number Call PhonePe customer care at 80–68727374 or 022–68727374. The customer care agent will raise a ticket and assist you further.
   
2. Social Media Report fraudulent incidents on PhonePe’s official social media accounts:
   
   • Twitter: https://twitter.com/PhonePeSupport
     
   • Facebook: https://www.facebook.com/OfficialPhonePe
     
3. Grievance Redressal If you already have a complaint ticket, you can report a grievance at: https://grievance.phonepe.com/ using your ticket ID.

Reporting to Authorities

• Cyber Crime Cell: File a complaint online at Cyber Crime Portal or call 1930.
• Department of Telecommunications (DOT): Report suspicious messages, calls, or any fraud  request via the Chakshu facility on Sanchar Saathi Portal.