The Ripple Effect of Digital Scams: Who Suffers the Most?

What began as a routine phone call turned into a gruelling 40-hour ordeal for actor Ankush Bahuguna, shedding light on the chilling lengths scammers will go to exploit their victims. In an emotional Instagram video, Bahuguna detailed how he was ensnared by psychological manipulation, financial deception, and relentless isolation.

The nightmare started with an automated call from an international number, claiming a package he was expecting had been cancelled. A simple press of “zero” for assistance spiralled into a labyrinth of deceit, with the scammers keeping him tethered to a video call for nearly two days, effectively cutting him off from friends and family. Bahuguna’s account offers a sobering reminder of how easily even the most vigilant ones can fall prey to such schemes.

This incident serves as a chilling reminder of the growing complexity of digital scams in India and the vulnerability of online users. It underscores how scammers are exploiting tech advancements to orchestrate increasingly sophisticated and psychologically manipulative frauds.

Digital scams are increasingly preying on social media users, employing a variety of tactics to commit online fraud. From phishing and identity theft to complex schemes like digital extortion and financial fraud, the threat continues to grow. A particularly alarming incident involved popular influencer Ankush Bahuguna, who became ensnared in a sophisticated scam that left him trapped for nearly 40 hours.

Online fraud is emerging as a growing threat for both consumers and brands, with digital scams causing widespread repercussions. These scams not only target individuals but also jeopardize the reputation and financial stability of e-commerce platforms. Fraudsters increasingly exploit system vulnerabilities, leaving customers defrauded and brands grappling with long-term damage to their image and trustworthiness. Both consumers and businesses must remain vigilant to protect themselves from falling victim to such scams.

Mahip Dwivedi, Vice President & Head of Marketing at Pepperfry, shares the financial and reputational fallout that e-commerce brands face when scams occur. “Scams and digital frauds are not new to the consumers; however, it does damage the brand name and image for a long term,” he states. The financial losses from fraud are often substantial, with companies having to bear the costs of refunds, returns, and even legal battles. The impact extends far beyond immediate monetary loss.

“Every incident of a system breach does impact the brand financially, where the brand witnesses a reduction in orders for a period and also for the long term due to deteriorating brand value and trust,” Dwivedi adds. This loss of trust is often irreversible, with customers who have been affected by fraud hesitant to return to a platform, and new customers deterred by negative reviews or news of fraudulent activities.

The rise of scams and frauds is largely due to the vulnerabilities in the e-commerce ecosystem that scammers are adept at exploiting. These vulnerabilities are often hidden in the fine details of the customer journey.

According to Dwivedi, fraudsters typically target post-purchase delivery processes, where they can manipulate the system to their advantage. “Scammers mostly leverage post-purchase delivery parameters and try to game the system,” he explains. This includes tactics such as fake delivery agents, mirrored websites that look similar to legitimate brands, selling counterfeit items, and manipulating returns and refunds. These loopholes are not only a threat to consumer safety but also to the integrity of the brand itself. As the volume of e-commerce transactions continues to increase, so does the opportunity for fraudsters to exploit weaknesses in the system.

Anita Nayyar, Consultant & Former COO of Media & Communication at Patanjali, highlights how scammers target every possible weakness in the e-commerce ecosystem. She states, “Scammers are leveraging every possible loophole... from fraudulent transactions to OTP sharing, to digital arrests, to accessing customer data and financial details, to sharing fake links, to sending messages in spite of no purchase.”

As technology evolves, so too does the sophistication of scams. The speed with which fraud tactics are advancing makes it difficult for e-commerce companies to keep up, often leaving them one step behind. Nayyar points out that while there are efforts to create awareness around fraud, the scale of the problem is such that “this certainly does not seem to be enough.” With the rapid adoption of e-commerce across India and beyond, scammers are constantly finding new ways to exploit vulnerabilities in digital transactions, making it crucial for businesses to stay vigilant.

One particular area that has been prone to exploitation is the Cash on Delivery (COD) model. While COD is seen as a convenient option for many customers, it also introduces a significant risk of fraud. Nayyar explains that the COD model becomes particularly vulnerable when “fake orders are placed, and delivery agents sometimes bring items that weren’t ordered, demanding payment”. This type of fraud is not only a financial burden, but also a logistical nightmare for e-commerce companies, who must handle the additional costs of returns, refunds, and disputed charges.

To mitigate the risks associated with COD, companies must implement measures that ensure the authenticity of every transaction. Dwivedi suggests that brands should consider introducing stricter policies around COD, such as limiting it to specific regions, requiring pre-payment for high-value orders, and implementing measures like “No Return Policy” or “Pre-Charges on COD” to prevent abuse of the system.

Abdus Samad, Founder, Sam & Marshall, shares similar thoughts. He emphasizes the importance of verifying every COD order through follow-up calls to confirm authenticity and reduce the likelihood of fake orders. Samad also encourages the use of prepaid transactions by offering discounts and incentives to customers, thereby reducing the dependency on COD.

Despite these precautions, scams and frauds remain a significant challenge. Brands have implemented fraud awareness campaigns to educate consumers about the dangers of online scams. However, these efforts have not always been as effective as hoped.

According to Dwivedi, many brands have not conducted sufficient fraud awareness campaigns. Instead, there has been an emphasis on promoting messages like “Buy Original” or “Genuine Products from XYZ Brand” within the e-commerce sector. Nayyar agrees, noting that while some efforts, such as government initiatives warning against fraudulent calls, have had some success, they are not enough. She argues that fraud awareness must be a continuous process, with constant reminders and education at every touchpoint. “Given the size of our country and the access to e-commerce and digital buying, any amount of caution being taken will never be enough,” Nayyar explains.

The use of advanced technologies like Artificial Intelligence (AI) and Machine Learning (ML) can be a game-changer in combating digital fraud. AI and ML can help identify patterns of fraudulent behavior, detect anomalies in transactions, and flag suspicious activities before they escalate.

Dwivedi highlights that AI/ML can assist brands in detecting fraudulent activities, especially in the areas of returns and refunds. “AI systems can help brands skim through massive datasets to identify irregular patterns on products sold via recommendation engines, margin losses on COD, and any other anomalies that may indicate fraudulent behavior,” he explains. By utilizing these technologies, e-commerce companies can not only prevent scams but also streamline the process of disputing chargebacks, which can be a time-consuming and resource-draining task.

For companies like Sam & Marshall, proactive steps are essential to stay ahead of fraud trends. Samad emphasizes the importance of robust order verification, particularly for high-value or COD transactions. “We verify all orders... through follow-up calls,” Samad states. The company also encourages customers to create unboxing videos as a means of protecting both the customer and the brand in case of disputes. Additionally, Samad highlights the importance of strengthening return processes to prevent fraudulent returns, such as requiring more detailed information about the product being returned. Regular training for staff and partners is also critical, ensuring that everyone involved in the delivery and return process can recognize the signs of fraud.

When scams occur, rebuilding consumer trust becomes a top priority. Dwivedi outlines several steps brands can take to recover from a fraud incident. “Acknowledge the mistake and compensate it immediately to the customer on social/PR wherever applicable,” he advises. By offering transparent communication and compensating affected customers, brands can help mitigate the damage and restore confidence. Additionally, improving internal processes and soliciting feedback from customers can help identify areas of improvement. Samad also agrees with the importance of transparency and accountability.

“We believe in open communication with our customers. If an issue arises, we inform them about it promptly, explain what caused it, and share the steps we are taking to resolve and prevent it in the future," he says. Proactive outreach and customer satisfaction are at the heart of rebuilding trust. By demonstrating care and responsibility, brands can not only resolve the immediate issue but also strengthen their relationship with their customers in the long term.