Understanding Cybercrime and White-Collar Fraud: Emerging Trends in Digital India

Introduction

The rapid expansion of digital infrastructure and excessive use of the internet have led to an increase in the number of white-collar crimes and cybercrimes in India. The rise of activities such as e-commerce, online shopping, online transactions, digital payments, etc. has created new opportunities for deceitful activities in society. This article will explore the nuances of white-collar crimes and cybercrimes and their emerging trends in the digital age in India. It will also highlight the legal frameworks and preventive measures to address the challenges of the crimes.

Decoding the terms

To begin with, let us understand what we mean by the terms “cybercrime” and “white-collar crimes.” Now, the terms may seem easy, but they cover a large realm of meaning that needs to be understood before we look into the nitty-gritty of the crimes mentioned above.

White collar crimes

The term “white-collar crime” may appear sophisticated; however, it encompasses offenses frequently reported in the news and of which we are aware, such as bank fraud, tax evasion, data fabrication, etc. These crimes are non-violent crimes typically committed by individuals from the upper and reputable strata of society, often in the course of their professional or occupational activities[1]. These crimes may be perpetrated by individuals or at a corporate level. Some of the key aspects of white-collar crimes are as follows;

1. They are non-violent
2. They are financially motivated
3. They are committed by professionals
4. There is abuse of position

Examples of white-collar crimes

1. Frauds: creating fake loan accounts to steal money or filing false claims to get insurance money.
2. Bribery: or paying money to government officials to get things done.
3. Corruption: companies offering kickbacks to secure contracts.
4. Insider trading: making use of any confidential information of the stock market to earn unfair profits.
5. Money laundering: the act of converting illegal money to legitimate assets to hide the source.
6. Tax evasion: showing wrong income or false records to evade the taxes.
7. Embezzlement: stealing the money entrusted to the business’s purpose.

These are a few examples of the offenses that come under white-collar crimes.

Legislations covering white-collar crimes

There is no specific legislation or section dedicated solely to white-collar crimes, as they cover various offenses under several laws. Below are some key sections and laws that deal with white-collar crime.

1. Companies Act of 2013:

                  Sec.447 of the Companies Act of 2013, deals with the offense of ‘fraud’

                        Sec 448 of the said act deals with ‘false statements in financial reports’

2. Income Tax Act,1961:

                        Sec. 276(C) of the said act deals with wilful attempt to evade tax.

3. SEBI Act, 1992:

                  Sec. 12A of the act, prohibits insider trading 

                  Sec. 24 of the act deals with punishments for the act of fraud in the securities market

4. PMLA, 2002:

                  Sec.3 of the said act deals with money laundering as a crime

                  Sec.4 deals with punishment for money laundering

5. Prevention of Corruption Act, 1988

                  Sec.7 of the act deals with public servants taking a bribe

                  Sec. 13 deals with criminal misconduct by the public officials

6. Bhartiya Nyaya Sanhita, 2023

 It does not specifically mention white-collar crimes but has several sections that are pertaining to the nature of white-collar crimes.

                  Sec. 111 (3) Deals with organised crimes.

                  Sec. 202 deals with engaging in trade unlawfully

                  Sec.335 deals with Forgery

                  Sec.341 deals with Counterfeiting currency notes or banknotes.

                  Sec.344 deals with the Falsification of accounts

These were a few laws and sections of the different legislation for white-collar crimes in India.

Case study

 Several famous cases come under white-collar crimes a few are listed below,[2]

• Harshad Mehta securities fraud
• Satyam scandal
• Ketan Parekh security scam
• Saradha chit fund case
• Punjab National Bank fraud
• 2G scam
• CWG scam

Let us look into the case “Harshad Mehta scam”

Case Details:

Primary Suspect: Harshad Mehta (Stock market broker).

Fraudulent Sum: ₹4,000 crore

Technique: Mehta took advantage of banking system vulnerabilities by illicitly acquiring funds from banks and utilizing them to manipulate stock values on the Bombay Stock Exchange (BSE)

Timeframe: The fraud occurred between 1991 and 1992 until it was uncovered by reporter Sucheta Dalal

Incident Summary: Mehta employed counterfeit bank receipts (BRs) to divert money from banks and channel it into the stock market, artificially elevating stock prices. He engineered a market surge, drawing in investors who unwittingly supported the scheme. The fraud unraveled in April 1992 when banks sought repayment, but Mehta was unable to comply. The stock market plummeted, resulting in insubstantial losses for investors and financial institutions

Court’s Final Ruling: SEBI and the CBI conducted investigations. Harshad Mehta was apprehended in 1992 and charged with over 70 criminal offenses. In 1999, he was found guilty in one instance and given a 5-year prison sentence. Mehta passed away in 2001 while still undergoing multiple legal proceedings. The scandal prompted more stringent banking regulations and the implementation of the SEBI Act, of 1992, to combat market manipulation.

This was all about white-collar crimes. Now let us discuss the cybercrimes in India.

Cybercrimes

Cybercrimes can be defined as illegal activities that are carried out with the use of computers, the internet, and digital devices. With the speedy advancements in technology and internet access cybercrime rates in India are increasing rapidly. We cannot fix boundaries for cybercrimes; it can happen anytime in any form. Cybercrimes are a significant threat to everyone out there.[3]  The national cybercrime reporting portal has listed some of the cybercrimes.  A few of them are mentioned below, and are explained with the help of an example: [4]

Types of cybercrimes

1. Cyberbullying:

E.g. A student is constantly getting hateful comments on social media from friends.

2. Cyberstalking:

 E.g. When someone is tracking our online activity and sending unwanted messages.

3. Child pornography:

E.g. Illicit images and videos of a child are shared online.

4. Job frauds:

E.g. Suppose a fake company is offering a very huge paying job to an individual and asks for a registration fee and then vanishes.

5. Vishing:

E.g. A person calls pretending to be a bank official and tricks a person into revealing data.

6. Sexting:

E.g. When someone shares explicit images or messages online which are later misused or leaked.

7. Ransomware:

E.g. Hacker gets unauthorized access of the company’s computer and locks all the files in return asks for money.

8. Data breach:

E.g. Customer data from banks gets leaked.

9. Espionage:

E.g. When a competitor company secretly gets all access to the confidential data of the rival company.

10. Phishing:

E.g. When a fake email is sent pretending to be from the bank, asking the user to fill in login details on a bogus website.

Legislations covering cybercrimes

Cybercrimes are covered under various laws and legislations in India.

1. Information Technology Act, 2000: This act is a primary act that governs the cybercrimes in the country.

Sec 43:  deals with penalties for unauthorized access, damage, and hacking of a computer device.

Sec 66:     hacking punishment and theft.

Sec 66C:   deceitful use of passwords and signatures.

Sec 66D:  online fraud, impersonation, phishing.

Sec 66E:  violation of privacy.

Sec 67:    child pornography.

Sec 72:    breaching confidentiality and privacy of users.

2. Bhartiya Nyaya Sanhita, 2023: This legislation replaced the old IPC and now the new BNS includes sections related to cybercrimes.

3. Digital Personal Data Protection Act, 2023 also plays an important role in protecting data, security, and user rights.
4. The Protection of Children from sexual offenses (POCSO) Act, 2012 covers the cybercrime of child pornography and exploitation of minors.

Case study

There are several examples of cyberattacks in India such as,

• BharatPay Hacked
• Swachhta Platform Hacked
• Cyberattack on AIIMS
• RailYatri Data Breach
• CloudSEK Data Breach
• Zivame Data Breach
• Motilal Oswal Cyber Incident

 Let us look into the details of the “Cyberattack on AIIMS”

Event:

AIIMS experienced a ransomware attack on November 23, 2022, which encrypted patient data and interrupted digital services. The perpetrators reportedly demanded ₹200 crore in cryptocurrency.

Consequences:

Approximately 40 million patient records were potentially exposed. Healthcare services were disrupted for 14 days. The incident raised concerns about VIP medical information security and national safety.

Action and Inquiry:

AIIMS resorted to manual processes, resulting in extended delays in patient treatment. The attack was investigated by the Indian Computer Emergency Response Team (CERT-In), Delhi Police, and other cybersecurity agencies. The National Investigation Agency (NIA) assumed control of the probe. IT experts, including teams from DRDO and private cybersecurity companies, aided in data retrieval.

Effects:

Healthcare disruption: AIIMS endured a 14-day service interruption, impacting patient care. Data security threat: Sensitive medical and personal information was at risk of compromise. National security issue: AIIMS treats VIP patients, including government officials.

Subsequent Measures and Preventive Strategies:

AIIMS enhanced its cybersecurity framework by transferring servers and implementing more stringent access controls. Government policy adjustment: The incident prompted healthcare institutions to bolster their cybersecurity protocols. AI-powered cybersecurity tools were suggested for future prevention.

Emerging trends of cybercrime and white-collar crimes in Digital India

 The swift growth of Digital India has brought about an increase in cybercrime and white-collar offenses, posing substantial threats to people, companies, and governmental bodies. Current cybercrime patterns include ransomware strikes on vital infrastructure, UPI and digital payment-related phishing schemes, and AI-enabled scams like deepfakes and identity theft. The rise of cryptocurrency fraud and dark web operations further hinders law enforcement endeavors. Simultaneously, digital white-collar crimes encompass banking scams, algorithmic manipulation for insider trading, corporate data leaks, and cryptocurrency-facilitated tax evasion. Additionally, e-governance frauds, such as Aadhaar and subsidy scams, highlight weaknesses in India’s digital framework. As technology progresses, AI-enhanced cybersecurity, robust financial regulations, and proactive law enforcement are crucial for effectively tackling these emerging challenges.

Conclusion

 In summary, while Digital India’s swift expansion has revolutionized daily life, work, and financial transactions, it has also spawned modern cyber and white-collar offenses. Cybercriminals are employing increasingly advanced tactics, ranging from ransomware attacks on crucial services like AIIMS to phishing schemes, deepfake scams, and cryptocurrency-related illegal activities. Similarly, white-collar crimes such as bank fraud, illegal insider trading, corporate information breaches, and tax evasion have become more common, jeopardizing economic stability and public confidence. These offenses affect not only large organizations and governmental bodies but also ordinary citizens, from individuals losing funds to digital cons to companies suffering data theft. Combating these challenges requires a unified approach, including enhanced cybersecurity protocols, AI-powered fraud detection systems, more stringent legislation, and widespread digital education. As technology continues to advance, staying ahead of cybercriminals is crucial for ensuring a protected and reliable digital landscape for everyone.

 

 References                                  

[1] CFI Team, White collar crime, Corporate Finance Institute, (February 11, 2025, 1.25 pm), https://corporatefinanceinstitute.com/resources/esg/white-collar-crime/

[2] Pravien Raj, top White Collar Crime Cases in India, Zolvit,(February 11, 2025, 2: 40 pm), https://vakilsearch.com/blog/top-white-collar-crime-cases-in-india/

[3] Proofpoint, https://www.proofpoint.com/au/threat-reference/cyber-crime, (last visited February 11, 2025)

[4] Cybercrime Reporting Portal, https://cybercrime.gov.in/webform/crimecatdes.aspx, (last visited February 11, 2025)