How to spot the most common UPI fraud red flags

As of October 1, 2025, banks and payment apps will no longer be able to send peer-to-peer (P2P) collect requests via the Unified Payments Interface (UPI). This decision by the National Payment Corporation of India (NPCI) is the latest in a series of measures aimed at combating UPI fraud. 

Industry watchers expect that the removal of this high-risk cash flow channel will reduce UPI fraud instances. While this is just one example, UPI scams have consistently created a nuisance for regulators and, at times, caused losses for users.

Before we proceed, let us understand what UPI fraud essentially means.

What is UPI fraud, and how does it happen?
 

UPI fraud can be any fraudulent activity that can be linked to UPI-based digital transactions. As a fast and convenient mode of mobile phone-based money transfer, UPI has gained immense popularity in India. This has often made it and its users a target of UPI hacks and mischiefs, leading to a rise in UPI complaints.

People who execute UPI fraud employ different tricks and tactics. It may be a random call from a supposed bank representative, a call asking for verification questions, mirroring the user’s UPI account, false claims about UPI-related technical difficulties and so on.

Reasons for UPI fraud in India
 

There are several key factors that are often cited as the causes of UPI fraud in India. These include:

· Rapid adoption: There is a concern that the rapid adoption of UPI has created a mass user population that is not well-versed in fraud. User training and securing payments need to be in sync with the adoption rate.

·  User manipulation: Manipulation tactics like urgency and fear are exploited by scammers. They lead users to approve fraudulent UPI transactions without allowing them the time to check the details for authenticity.

· Advanced techniques: While NPCI is using technological sophistication in UPI, the scammers are trying to catch up to it. They are now using advanced technologies like AI and deepfakes to weave more authentic-looking scams.

· Training issues: Many users are not up to date with the latest fraud tactics. Users should be aware of the dos and don’ts of UPI usage.

· Inadequate security: Negligence of mobile security also leads to UPI fraud and malpractices. This happens as their UPI account remains unprotected and vulnerable to threats.

·  UPI collect feature: While this is being addressed, fraudsters have been using UPI’s collect feature to send deceptive payment requests to users.

Types of UPI fraud in India
 

UPI fraud in India can happen in many ways. However, these scams often share certain common patterns that can be used to identify when a fraud is occurring. Some of the most common types of UPI fraud in India include:

· Fake UPI transactions
 

Scammers redirect users to fraudulent apps or phishing websites by making them believe that they are conducting a genuine UPI transaction. The app or website then steals the UPI account credentials.

Scammers also share fake payment screenshots with users to make them believe that an authentic transaction has been made.

· Vishing
 

In this scam, fraudsters pretend to be bank representatives and ask for sensitive account details. Once they get hold of information like UPI PINs, passwords, and trick users into revealing sensitive details like UPI PINs and passwords.

· Misrepresentation
 

Scammers may also disguise themselves as bankers, customer service personnel, etc., to obtain UPI PINs or OTPs from users.

· Phishing
 

It is a common tactic where scammers entice users to fake websites through deceptive emails, only for the users to share their credentials on the website. The users should always ensure that it is safe to share their UPI ID.

· Malware
 

Malicious software, also known as malware, gets downloaded when users access fake links or attachments. The malware then gathers UPI and banking information from the person’s computer or mobile phone.

· Screen monitoring apps
 

These are fraudulent apps that can discreetly record the activities on the user’s screen. Through these recordings, vital UPI information is captured.

· SIM cloning
 

Another alarming malpractice is the cloning of a user’s SIM by fraudsters. They use the clone SIM to illegally access and use the user account.

· Fake UPI handles
 

These handles are used by fraudsters to display offers and fake payment requests. It serves as bait to attract UPI users.

· Money mule
 

This involves elaborate fraud rackets that use the PI user’s account as an intermediary, hiding money laundering. The UPI user’s account is used as a money mule by routing transactions through it.

· Remittance fee scams
 

Fraudsters mislead users by claiming that inward or outward remittances in foreign or domestic currency require an additional fee to be paid via UPI. Victims are asked to transfer this so-called “processing” or “clearance” charge to release or complete the transaction, but the remittance itself is either fake or never arrives.

· Collect requests
 

Fraudsters use UPI collect requests to process refunds or obtain payment authorisations.

Avoiding UPI fraud
 

Given the plethora of threats floating around in cyberspace, it would only be wise to know how to avoid these threats. Some of the ways you can avoid UPI fraud attempts are –

· Protecting the account: To start with, make sure that you set a strong UPI PIN. Besides, always keep your phone locked and set a strong screen lock as well.

· UPI alerts: Most UPI apps have in-built spam alerts. Users should pay attention to such notifications before making the payment or accepting payment requests.

· Exercising caution in interactions: When interacting with unknown callers and messages, users should be cautious not to reveal any sensitive information.

· Avoiding malicious applications: The user should not download apps from unverified sources. Only apps with positive reviews and from trusted app stores should be downloaded.

· Avoiding links: Users must not click on suspicious links, whether in text messages or emails. These links can lead them to fraudulent sites or compromise their UPI account in any other way.

· Know the basics: You should be aware of the fraud addressal process, and other terms and conditions related to UPI. It is also useful to know how to get money back from UPI fraud.

· Monitor bank communication: Banks send notification messages for transactions made in the linked bank account. If you notice any suspicious activity, like password changes and payments, you should know how to block UPI transactions.

Apart from monitoring the bank notifications, it is also important that you choose a reliable bank for your UPI app.

Secure banking practices
 

IDFC FIRST Bank offers a safe and smooth UPI experience with its mobile banking app. Using the IDFC FIRST Bank Mobile Banking App means that your UPI transactions are protected with fraud detection mechanisms and multi-layer authentication.

The app seamlessly integrates with your savings account and ensures fast and safe UPI transactions. UPI ID is verified in every transaction with the IDFC FIRST Bank Mobile Banking App. Real-time fraud monitoring by IDFC FIRST Bank ensures early detection of fraudulent activities.

Being UPI safe
 

Scammers are always busy coming up with new tricks to commit UPI fraud. Users, on their part, need to be cautious and thwart any such malicious attempts. Apart from the caution and attention, choosing the right banking partner can further protect you from UPI fraud. Choose the IDFC FIRST Bank Mobile Banking App to get the finest UPI experience today.