TL;DR
- DoT has announced the Fraud Risk Indicator Tool to curb digital fraud.
- It will divide numbers into three categories- High, Medium, and Low.
- PhonePe is the first to adopt FRI.
To address the increasing incidents of cyber fraud, the Department of Telecommunications (DoT) has launched a new Fraud Risk Indicator (FRI) tool, a significant feature of the Digital Intelligence Platform. This risk-based tool aims to bolster the security of digital transactions by facilitating prompt intelligence sharing among banks, UPI service providers, and other financial entities. The FRI serves as a comprehensive analytical instrument that categorizes mobile numbers according to their potential involvement in financial fraud.
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What exactly is FRI?
The FRI tool can classify mobile numbers into three risk categories- Medium, High, or Very High. The classification is done on the basis of-
- Intelligence from banks and financial institutions.
- Inputs from DoT’s Chakshu platform.
- Cases registered through India’s National Cybercrime Reporting Portal (NCRP).
These alerts help banks, NBFCs, and UPI service providers take extra precautions when a number is marked in a high-risk category.
How Does FRI Work?
The DIU frequently distributes a Mobile Number Revocation List that includes information on numbers that have been disconnected due to reasons such as exceeding usage limits, not completing re-verification, and involvement in cybercrime.
Numerous figures are associated with previous financial frauds, and the FRI Tool offers early alerts regarding potentially hazardous mobile numbers. When a number is identified as suspicious by any stakeholder, the DIP system conducts a thorough evaluation and determines a fraud risk rating. This information is promptly disseminated to all relevant parties.
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FRI for Financial Platforms
PhonePe is one of the pioneers in implementing the FRI system. The company has stated that it prevents transactions associated with Very High risk numbers and provides alerts through its PhonePe Protect feature. For medium-risk numbers, the company issues warnings prior to the completion of transactions. Data provided by PhonePe demonstrates the effectiveness of this tool, indicating a strong correlation between FRI classifications and actual instances of fraud.
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Others to adopt FRI
Other UPI platforms, such as Paytm and Google Pay, representing 90% of UPI transactions, have begun implementing FRI alerts. These alerts involve:
• Postponing transactions and sending notifications that necessitate user approval
• Leveraging risk data from DIP to mitigate fraudulent activities. Additionally, banks are gradually incorporating this data to enhance their internal fraud detection mechanisms.
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DoT’s Objectives & Future Outlook with FRI
As UPI stands out as a leading payment method in India, the FRI has the potential to safeguard countless citizens against financial fraud. The Department of Telecommunications (DoT) is dedicated to curbing the misuse of telecom resources through national, technology-driven initiatives.
The department aims to establish a secure telecom landscape by collaborating with digital payment companies and financial institutions. The DoT asserts that incorporating the FRI into user-facing systems could gradually evolve into a standard industry practice, thereby enhancing the resilience of India’s digital payment framework.
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