UPI fraud has hit 1 in 5 Indian families; majority don’t report it, survey finds

Over one in five Indian families with a Unified Payments Interface (UPI) user has experienced fraud at least once in the past three years, according to a recent LocalCircles survey. The survey revealed that over 51% of those affected did not report the fraud to any authority, suggesting that the actual scale of UPI-related financial crime may be significantly underreported.

The survey, conducted between March and June 2025, received over 32,000 responses from UPI users across 365 districts in India. Of the 16,312 people who answered the fraud-related question, 20% confirmed they or their family members had fallen victim to UPI fraud since 2022.

Among the victims, 50% said their UPI settings or PIN were hacked, while 40% admitted to clicking on payment links that led to unauthorised debits from their accounts.

Multiple respondents reported being duped in more than one way, including QR code scams and phishing by fraudsters posing as bank representatives.

Despite the existence of grievance redressal mechanisms, such as the National Cybercrime Reporting Portal (cybercrime.gov.in) and helpline 1930, more than half of those who suffered fraud did not file a complaint. This highlights a critical gap in user trust and accessibility in fraud reporting systems.

Digital payment frauds have risen in tandem with the explosive growth of UPI, which clocked over 185 billion transactions in FY25, a 41.7% increase year-on-year, according to the Reserve Bank of India (RBI). The RBI’s latest annual report noted that digital frauds made up 56.5% of all banking fraud cases in FY25, totalling ₹520 crore. While UPI-specific data wasn’t isolated, card and internet-based transactions, which include UPI, dominated this category. Fortune India in November last year had reported that the country saw 13.42 lakh UPI fraud cases in FY24, in which around ₹1,087 crore were involved, a huge spike from ₹573 crore in FY23.

The RBI and National Payments Corporation of India (NPCI) have rolled out several initiatives, including AI-based fraud detection tools like MuleHunter.AI and daily transaction caps, to tighten security. However, the survey report recommends further action, including a single-click complaint filing system and real-time alerts for suspicious payment links across SMS and messaging apps.

With UPI now accounting for over 83% of all digital payments by volume, the findings underline the urgency for a coordinated, tech-driven crackdown on fraud.