SME Times

Saurabh Gupta | 05 Aug, 2008
Most of the owners of businesses are not aware about the possibilities and the effects of cyber crime or click frauds happening in the corporate world around us. It is a serious threat to the nation, Attorney-at-law & Partner, Seth Associates, Karnika Seth told SME Times in an exclusive interview.

Excerpts of the interview…

What are the major cyber frauds (Business to Business) faced by corporate world while doing business with overseas companies?

Karnika Seth: In most of the transactions in the corporate world there are chances of various types of online fraud. First of all if someone is dealing with companies which are based abroad, there is a problem of credibility check for these overseas companies. We don’t know exactly who the owner is and where it is established because there are various virtual offices and there are no registered or incorporated offices of their companies. So there are chances of fraud or cheating.

Then there are cases of phishing or commonly called Nigerian fraud. Phishing is the luring of an internet user to reveal personal details (like passwords, credit card information, etc.) on a fake webpage or email form pretending to come from a legitimate company or banks. These cheaters make a fake bank account and ask the details online.

Then there is possibility of cheating by impersonation, where a person is imitating the mannerisms of another person X or Y.

The corporate world has a major problem of data theft, which can easily be transferred from one computer to the other with just a single click of mouse. So the corporate world needs to be aware and should be alert about the possibilities and harm of the cyber crime.

What is internet marketing or SEO fraud?
Karnika Seth: Search engine optimization (SEO) is method which can be applied to a website to increase the ranking of your website on the search engines. People sometimes deliberately optimize the pages by those particular keywords to attract customers and traffic, but the intention is not to deliver service.

This activity is also a type of fraud. The technical experts deliberately optimize a website to seek credibility of the products or services on their website.

What are the types of investment fraud seen online?
Karnika Seth: One should always think twice before he/ she invests money through the Internet because now a days the internet is also an important tool for fraudsters. One of the major investment fraud seen at present is credit card frauds. In this category credit card frauds are majorly there. Credit cards can easily be screened by a single swapping at restaurant or at a petrol pump, which leads to fake online shopping and all.

Another thing is online banking frauds. I will like to say that never give your internet banking id and password to anyone not even to the bank itself. Banks too advise their account holders to not to disclose their details.

There are several agents who act as middleman in the tendering process for mostly overseas bidders. In many cases these middlemen have been found to be frauds. What is your comment on this? And how can one take care of online tender frauds?
Karnika Seth: We do get various clients who are involved in the tendering activity. Our role is to check the credibility of the company and the tender too…whether these tenders are fair and the process and rule of tendering is compliant as per the laws. We have to check that is there any scope of fraud or cheating.

I have seen a case of tendering in which hundreds of terminals start filling tenders at the last hour of closing a tender may be from a same company which is illegal and also depends upon the bidding conditions of the company. So any sort of tampering with technology is not allowed.

And this middle man case is the case of cheating by impersonation. Again the credibility and authenticity needs to be checked of this kind of middleman. And as per my opinion, none of the overseas companies hire such types of middleman. So need not to go through this channel in the process of tendering.

I keep receiving mails from different ids, some promising money or business, while many ask for providing samples of my products to them. Once or twice I did send, but I received no replies after that. Some of my colleagues tell me that they might be 409 or 419 frauds. What it means?
Karnika Seth: Frauds 409 or 419 are basically the lottery scam in which some overseas persons are involved to cheat innocent persons or organizations by promising to give a good amount of money at nominal fee charges. Their intention is to steal money in the form of fee against the lottery prize.

It is popularly known as the ‘Nigerian Scam’. The 419 fraud is a sub-classification of Advance Fee Fraud crime in which the target person receives an unsolicited fax, email, or letter often concerning Nigeria or another African nation containing either a money laundering or other illegal proposal or he/ she might receive a legal and legitimate business proposal by normal means.

How can one find the right person online?
Karnika Seth: While doing business globally the common hurdle is conducting a credibility check of mushrooming overseas companies with their registered virtual offices, which is a new concept. But the fraudster is using these means very often to cheat companies off their hard-earned money.

While doing overseas businesses, a businessman need to check the credibility of the company through its corporate history, through its client database and if needed, can go through the financial details of the company.

How efficient is the Indian cyber law in handling internet fraud?
Karnika Seth: Although the Indian cyber law is to some extent very competitive. However there is a need to amend the Information Technology Act (ITA), 2000. ITA-2000 is versatile enough to accommodate the aspects of crime.

Under ITA-2000 the offense is recognized both under Section 66 and Section 43. Accordingly, the persons involved are liable for imprisonment and fine as well as a liability to pay damage to the victims to the maximum extent of Rs 1 crore per victim for which the “Adjudication Process” can be invoked.

The punishment for cyber crime is somewhere around three years to seven years depending upon the offense.

How can one avoid online banking fraud?
Karnika Seth: In this age and time, we need internet banking and other internet services, yet it needs to be full-proof which is however very difficult. Technically we are trying a lot to do away with these short comings. One should be competitive enough at the technological front like we have RSH feed for security.

These crimes are happening at a very fast rate. So lot of IT audit is required, which will make sure few things like password allocation which is given to the clients should be very-very complicated and companies need to keep changing from time to time.

Changing the password and access to the confidential machines should not be allowed to the employees after the office hours and also not from their home.

Now offices are based on sharing basis or on the network where lots of folders are shared and these folders keep some confidential and sensitive information. There is also a need of proper maintenance of the log by the IT department.

While doing the overseas businesses a businessman need to check the credibility of the company through its corporate history, through its client data base and if needed can go through the financial details of the company.

I will suggest that one should do good research before he/ she sends any kind of money to anyone over the internet. And never pay anything upfront for any reason and never extend credit for any reason.