IIT Madras study finds fear and urgency drive cyber fraud victims, not poor digital literacy

Highly educated and digitally experienced professionals are just as vulnerable to financial cyber fraud as anyone else, according to a study by researchers at the Indian Institute of Technology (IIT) Madras. The research found that fraudsters deliberately exploit fear, stress and urgency to impair a victim's ability to think clearly.

The study drew on interviews with 33 victims, including IT professionals, bankers, doctors, management and finance executives, public-sector officers and even people holding cybersecurity certifications. The group comprised 22 men and 11 women, among them 12 senior citizens, spread across Chennai, Bengaluru, Hyderabad, New Delhi and Mumbai.

Researchers found that victims were frequently targeted during periods of heightened personal vulnerability — such as illness in the family, retirement, a job search or workplace pressure. Fraudsters combined threats, financial incentives and concerns about reputation to produce what the researchers call an "engineered brain freeze", leaving victims in a state of "mind arrest" in which they struggled to assess the situation.

Reported losses ranged from a few thousand rupees to more than Rs 1 crore. The damage extended beyond money: victims described shame, insomnia, depression and strained family relationships.

The study challenges the assumption that cybercrime victims are mainly people with weak technological knowledge or those driven by greed. It found that fear, family expectations, financial pressure and a simple lack of awareness that a crime was unfolding could also create openings for fraud.

The research was led by Professor P Kandaswamy and Professor Nandan Sudarsanam of IIT Madras, with collaboration from Professor Akanksha Jaiswal of The University of Western Australia's Chennai campus and Professor Ameeta Fernando of the Loyola Institute of Business Administration, Chennai. The Wadhwani School of Data Science and Artificial Intelligence at IIT Madras supported the work.

"Our findings show that financial cybercrime is not simply a problem of inadequate digital literacy," Sudarsanam said. "Even highly educated and digitally experienced individuals can become vulnerable when fraudsters exploit fear, stress, and urgency."

Kandaswamy, a retired Indian Police Service officer, said the response to cybercrime must move beyond blaming victims. He called for stronger systems for early detection, rapid intervention and coordinated action, along with better support for those affected.

The researchers identified several fraud tactics specific to India, including threats involving Aadhaar, UPI-based transfers, fake investment platforms claiming SEBI registration, and "digital arrest" scams. Institutional responses varied, they found, with some banks and cybercrime cells acting quickly while others lacked the necessary technical capabilities and coordination.

The team recommended stronger systems to flag suspicious transactions early, faster intervention by banks, and better coordination among banks, police and courts. It also urged replacing generic warnings to "be careful online" with targeted awareness campaigns built around specific fraud tactics and the situations in which people are most vulnerable.

The researchers cautioned that the study is qualitative, limited to metropolitan areas and largely reflects the experiences of victims who came forward to report fraud. They plan to test the findings through a multilingual, large-scale survey and to extend future work to tier-II and tier-III cities, the unorganised sector and long-term victim recovery.