With the advent of digital age, frauds have become more sophisticated.

One of the smartest way fraudsters have been stealing money is when the criminals contact potential victims by SMS and trick them into providing personal information or bank account information, or clicking on links that download malware onto their phones.

Despite awareness campaigns by telecom operators, banks, government and regulatory agencies, SMS frauds are on the rise. According to the Swedish company Truecaller, over 100 million people in India have received at least one fraudulent SMS in the past three months. These scams range from non-payment of electricity bills, job offers, KYC-related and other bank frauds, lottery scams, charity scams, etc.

“The number of incidents and amount of loss incurred by the customers due to Phishing, Vishing and Credentials/ OTP compromise attributed to breach on the part of the customer between April 1, 2000 to March 31, 2022 stood at 9,34,109 and ₹1,434.75 crore, respectively”, said Bhagwat Karad, Minister of State for Finance, in Rajya Sabha in August 2022.

Fixing responsibility

But whose responsibility is it to protect cell phone users from fraudsters?

When highways are built, norms for the safety of motorists are devised. Police patrol is also provided to detect wrong-doers. The National Highways Authority of India (NHAI) is responsible for setting up and ensuring enforcement of these standards.

Similarly, the Telecom Regulatory Authority of India (TRAI) is mandated to regulate telecommunication service, and protect the interest of consumers. TRAI has, since 2006, published multiple consultation papers on unsolicited commercial communication (UCC). It has also framed the Telecom Commercial Communications Customer Preference Regulations which are amended from time to time, the last amendment being in December 2018.

Companies need to register themselves for commercial SMS and calls and adopt distributed ledger technology (DLT). It is the Telecom Service Providers (TSPs) who are responsible for implementing the TRAI regulations. DLT is key to restricting unsolicited calls.

Interestingly, a document available on the TRAI website points out that India had a total mobile subscriber base of 120 crore when out of which more than 23 crore had registered in ‘Do Not Disturb (DND) registry. Total SMS messages ran into 3,000 crore per month.

There were 22,000 registered telemarketers and 12 lakh connections had been disconnected due to illegal telemarketing activity.

It appears that neither any meaningful enforcement measures have been adopted nor have audits been conducted by TRAI to force the TSPs to prevent spam SMS or calls. A major reason for this lackadaisical approach of TSPs could be their low average revenue per user (ARPU).

SMS is today the most widely-used data application in the world. Studies indicate that consumers open 90 per cent of the marketing text messages within three minutes of their receiving the message.

People can always be forewarned against attempted miscarriage just as suspicious emails have ‘possible spam mail’ indicated by the email platform. Similarly, centrally empowered authorities must enforce mandates to ensure compliance from payment platforms.

According to reports, Truecaller has introduced SMS Fraud Protection, which provides alerts to users to protect them against SMS fraud. Truecaller is used by 248 million Indians out of a global user base of 338 million. Can there be a way to get people use this service — at low cost, if necessary? Protecting consumers is key to achieving a less-cash society and become a world leader in digital payments.

Rath is a former central banker. Views expressed are personal.