There has been a concerning rise in mule accounts in India, according to a report ‘2024 Digital Banking Fraud Trends in India’ by BioCatch, a leader in digital fraud detection powered by behavioural biometric intelligence. What is even more concerning is that most of these mule accounts go unreported. What are mule accounts? “A mule account refers to an account that is used to receive and transfer funds acquired illegally on behalf of others,” says Vikram Gidwani, BioCatch South Asia Business Head and Fraud Risk-Management Expert, BioCatch.
Also read: KYC-update frauds get RBI attention: Know how scams happen, how to protect yourself.
Mule account fraud: All you need to know
How can you become a target of this mule account fraud? Gidwani explains a fraudster may contact potential victims using email, chat rooms, social media, etc., and persuade them to rent out their bank accounts or cards or receive unknown funds in their bank accounts in exchange for a reward or other forms of consideration. Once the victims agree to do these, the fraudster will conduct unauthorised acts which could include illegal activities or transactions using such accounts known as mule accounts.
Mule accounts on the rise: “Concerning issue”
A recent case in Bengaluru involved the arrest of individuals operating 126 mule accounts linked to various cybercrimes across India, highlighting the scale and complexity of the issue, the report mentioned. The preliminary analysis of one of these cases showed the fraudsters used a device shared among four other reported mule accounts. On further investigation, BioCatch learnt that every device found to participate in mule activity across banks logged into an average of 35 accounts each. “Looking at all the accounts accessed from these devices, we found the bank had only reported 11% of these as mule accounts, meaning it was likely unaware of 9 out of every 10 mule accounts,” the report said.
“In India, mule accounts are being opened by legitimate Indian nationals who are selling off the use of the accounts (the “Accomplice” persona). This makes the account harder to detect at onboarding,” noted the report.
At least Rs 18 million is known to have passed through some of these mule accounts, reported BioCatch.
How to protect your bank account from mule account fraud?
Gidwani shares some tips about how to protect your bank account from mule account Fraud:
- You should not accept lucrative job offers or rewards or purported investment schemes or any kind of offer that seems to be extraordinarily promising i.e. too good to be true that promises fast return or zero risk which requires them to disclose their banking details including their card and/or online banking login and password.
- You should not share your bank account details, internet banking username and/or password, ATM Card, bank account number, types of accounts maintained with the bank, PIN Number to any third party,
- Scammers often pressure you into making swift decisions, such as hurriedly confirming your identity or claiming a reward. Pause and scrutinize the demands carefully.
- If you’re solicited to use unconventional payment methods, such as gift cards or virtual currency, be very cautious.
- You should Report scam/ fraud to the bank and law enforcement agency immediately if they think they might already be part of a mule account scam.
‘Mule Account’ fraud: Avoid at any cost
For some extra money if you are lending your bank account or other details, then it is highly risky. This is because doing so will make you an accomplice to the crime. “If a bank’s customer is knowingly sharing his credentials to a fraudster for money muling he is implicit to the whole fraud, and the only way a bank can stop this is putting in place controls which will monitor the user’s behaviour throughout the lifecycle of the account,” says Gidwani.
According to Gidwani, “Victims can be prosecuted under the law if their account(s) are found to be involved in such illegal activities even if they are not directly involved or not having the knowledge of such illegal activities.”
