Author(s) :

UDIT MUDGAL.

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Abstract :

Abstract This chapter presents an in-depth analysis of the findings from a qualitative study on cyber fraud in the banking sector, with a focus on regulatory frameworks, accountability, and consumer protection. The data was gathered through extensive literature review and analysis of relevant regulatory documents, offering a comprehensive overview of cyber fraud’s nature, impact, and redress mechanisms across different regions. The chapter begins by outlining the methodology, which employs a thematic approach to identify recurring patterns and insights. It acknowledges inherent limitations, such as reliance on secondary data, which may limit generalizability, and the global diversity in legal frameworks. Ethical considerations, such as data confidentiality and unbiased analysis, are also emphasized. The study categorizes cyber fraud into external and internal threats. External threats include phishing, malware attacks, social engineering, and identity theft, while internal fraud stems from insider threats. Phishing emerges as the most prevalent form of attack. The scale of cyber fraud is escalating globally, with alarming statistics from the US, UK, and India highlighting significant financial and reputational losses for both consumers and financial institutions. An evaluation of regulatory frameworks reveals that while comprehensive laws and policies exist—such as those from central banks and cybersecurity agencies—their effectiveness is hindered by enforcement gaps, resource constraints, and the rapidly evolving nature of cyber threats. Despite guidelines that mandate secure channels for transactions and timely breach reporting, many financial institutions struggle with consistent compliance, particularly smaller banks. The study assesses the banking sector’s accountability in protecting consumers. It finds that although regulatory policies assign clear responsibilities to banks, challenges such as limited resources, fragmented enforcement, and occasional prioritization of profit over security hinder their effectiveness. Consumer education and transparent communication about risks and incidents are lacking. Moreover, banks often delay in responding to complaints, further eroding trust. Existing redress mechanisms, including reimbursement, dispute resolution processes, legal avenues, and external arbitration bodies, vary in their accessibility and effectiveness. While some banks offer streamlined redressal systems, inconsistencies and delays remain common. Victims often face challenges in proving fraud or locating perpetrators, especially given the cross-border nature of cybercrime. The study suggests improvements such as the implementation of standardized metrics to evaluate policy effectiveness, increased inter-agency coordination, and enhanced consumer awareness programs. Alternative dispute resolution (ADR) mechanisms, adoption of advanced cybersecurity technologies like biometrics and AI, and equitable regulatory reforms are also recommended. In conclusion, the findings emphasize that cyber fraud in banking is a multifaceted and escalating problem that necessitates a holistic and collaborative response. The study calls for a strengthened regulatory framework, improved enforcement, heightened accountability, and better consumer support mechanisms. These measures are vital to safeguarding consumer interests, maintaining trust in the financial system, and adapting to the dynamic cyber threat landscape.

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