An Analysis of Online Fraud Using Fake Identity

Aqib Ul Ahad Wani & Bisma Yousuf  ✉

The utilization of bogus identities in online fraud presents a complicated legal environment where criminal, civil, and regulatory issues coexist. The legal aspects of the phenomenon, involving theft of identities, fraud, scams, internet crimes, and privacy laws, are examined in the current article. The investigation delves into the legal ramifications of fabricating and using false identities on the internet, examining pertinent laws such as the Information Technology Act of 2000 and the Indian Penal Code.


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The report draws attention to the difficulties with jurisdiction and international cooperation in a digital environment that is becoming more and more globalized. The report also looks at how defamation laws, banking restrictions, and civil liabilities interact to combat online fraud. The function of regulatory frameworks, such as the cybersecurity guidelines published by the Reserve Bank of India,.

In the context of combating fraudulent activity, the importance of regulatory compliance procedures, such as Know Your Customer (KYC) and Anti-Money Laundering (AML) processes, is emphasized. The article highlights the need for law enforcement agencies, governments, companies, and people to work collectively to pretence effectively manage the various difficulties that arise from online fraud involving bogus identities.

Methods for online fraud using false identities:

1. Phishing and spoofing: Criminals create fraudulent emails, webpages, or messages claiming to originate from reputable business organizations, financial institutions, or government entities. Under the pretence of verification or an urgent need for immediate action, these messages frequently ask for sensitive information, including passwords, credit card numbers, or personal identities.

2. Identity Theft:

Criminals use many kinds of techniques, including physical theft, social engineering, and database hacking, to obtain personal information from people. Then, false identities are created for fraudulent actions using this stolen information.

3. Fake online profiles:

To build connections and confidence with their victims, perpetrators create fictitious profiles on social media, dating site apps, or professional websites. They might make use of these connections to gain money, financial information, or even personal information from their targets.

4. Fraudulent online stores:

To deceive people into purchasing fake products or services, scammers create fraudulent marketplaces on the web, auction sites, or e-commerce platforms. They might take money, but they never deliver the products they promised.

5. Scams at Work

The perpetrators lure victims in with false job opportunities or work-from-home programs, demanding payment in advance for background checks or training materials. The fraudsters disappear when the money is received.

6. Financial and Investment Fraud:

Fraudsters provide too-good-to-be-true investment possibilities while posing as financial advisors or investment consultants. After being persuaded to invest money, victims have it stolen.  An example of this kind of fraud is the recently exposed Ponzi scheme that defrauded thousands of people in J&K in the name of beauty items, and easy money. Thousands of people, mostly homemakers and students, were enticed to participate in surveys by the Chennai-based Company “Curative Survey” because they “plan to launch beauty products” in exchange for large payouts. By using a free account, the company promised simple survey takers Rs 200 every two weeks and this is where the seemingly harmless activity turns into something dishonest. 

The business offered paid accounts, where investors paid Rs 5,000 each in exchange for a guarantee of receiving Rs 1,500 every two weeks for surveys. It was promised that a person with multiple paid accounts would see a corresponding rise in income. In addition, Rs 250 was offered to the investors for each referral. In addition, the business paid them more as promised for more referrals, which attracted new investors. Even some influencers on social media created promotional videos for this company.

The company abruptly stopped making payments when the number of investors reached thousands. Alarmed investors found all offices of the company shut and its promoters and directors missing. A  local YouTuber, with the social media handle ‘NAFxx Tech’ had warned people against “investing” in the ‘Curative Survey’ and explained how it could be a scam. The scam caused a stir in the Valley, and the J&K Police’s Cyber Wing lodged a case under the IT Act and IPC. “The fraudulent company tricked the victims into depositing their hard-earned money by making exaggerated claims of huge profits.

7. Scams of Romance Online:

On dating sites, scammers create accounts to initiate romantic relationships with gullible people. Once they have established an intimacy, they fabricate tales of financial hardship and demand money from their victims.

8. Fake contests and offers:

Fraudsters impersonate winners of lotteries, contests, or special offers and demand payment or personal information from their targets to receive their claimed reward.


Conclusion

In short, using bogus identities for online fraud is a complex and widespread issue that has implications for law, technology, and society. Cybercriminals take advantage of online platforms to deceive people, companies, and groups, leading to financial losses, damage to their reputations, and emotional distress. To tackle this problem, a multipronged strategy involving legislation, technology development, and user education is required. Advancements in technology, like more secure methods for authentication, artificial intelligence-driven fraud detection, and safe digital identity verification, can serve as precautionary measures. To reduce the risk of fraud, companies and financial institutions must additionally have robust safety precautions in place, follow Know Your Customer (KYC) instructions, and regularly update their cybersecurity plans.


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