Delhi High Court Scrutinizes UPI Fraud
The Delhi High Court has issued notices to the central government, the Reserve Bank of India (RBI), and the National Payments Corporation of India (NPCI). The action follows a public interest litigation demanding the creation of comprehensive guidelines to combat UPI-based fraud. This judicial intervention signals potential new compliance and security mandates for all platforms processing UPI payments.
- The public interest litigation (PIL) was filed by Pankaj Nigam, a retired Central Government employee who was personally defrauded of ₹1,24,616 in February 2024 while searching for rental accommodation online. His petition argues that in the absence of an effective mechanism, victims of online scams are left "running from pillar to post." - The petition highlights a significant increase in digital payment fraud, which it claims surged fivefold to ₹14.57 billion in the financial year ending March 2024. Specifically, domestic UPI payment fraud grew from ₹111 crore in FY 2020-21 to ₹573 crore in FY 2022-23. - A key demand of the PIL is to make full KYC (Know Your Customer) compliance mandatory for all bank accounts to be eligible for UPI transactions, arguing that non-compliant accounts allow fraudsters to operate with anonymity. - The litigation seeks the creation of a unified and seamless complaint platform that integrates the National Cyber Crime Helpline Portal with all UPI apps, banks, and telecom operators to allow for time-sensitive reporting. It points out that the current fragmented system discourages victims from reporting crimes within the crucial initial window. - Fraudsters are employing increasingly sophisticated techniques, including "Digital Arrest," the use of Artificial Intelligence (AI), spamming multiple collection requests, and creating fake UPI-QR codes to deceive users. - The plea calls for a specialized Standard Operating Procedure (SOP) for investigating multi-jurisdictional cyber frauds and for including UPI frauds under ₹10 lakh within the e-Zero FIR initiative for automatic case registration. - The case is being heard by a Division Bench of the Delhi High Court comprising Chief Justice D.K. Upadhyaya and Justice Tejas Karia.
