MobiKwik suffered a major Rs 40 crore fraud due to a technical flaw, allowing over five lakh fake transactions. Six people have been arrested, and authorities have frozen Rs 8 crore while the company recovered Rs 14 crore.
Digital payments platform MobiKwik has suffered a major security breach that led to an estimated Rs 40 crore being fraudulently withdrawn over two days earlier this month, according to reports. The incident reportedly took place on September 11 and 12 and was linked to a vulnerability in the company’s systems following a recent software update.
The Gurugram Police have acted quickly and frozen 2,500 bank accounts holding a total of Rs 8 crore in connection with the case, a PTI report stated. Investigators revealed that the flaw in MobiKwik’s system allowed users to make transactions exceeding their wallet balances.
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In some cases, even entering incorrect UPI PINs did not prevent fraudulent transactions. This loophole resulted in more than five lakh unauthorized transfers, with the stolen funds being distributed across at least 2,500 beneficiary bank accounts.
The breach was discovered on September 13, after a company employee noticed suspicious activity during a routine audit. MobiKwik immediately filed a police complaint.
According to the PTI report, a representative of One MobiKwik Systems said that
“on September 12, certain suspicious transactions were noticed, which were done by various MobiKwik-registered merchants as well as some unknown persons.”
So far, six people have been arrested in connection with the fraud. They have been remanded to judicial custody after investigators recovered nearly Rs 9 lakh of the stolen money from their accounts, according to a TOI report.
Authorities have managed to freeze Rs 8 crore, while the company itself has recovered about Rs 14 crore, leaving a net loss of approximately Rs 26 crore.
Police have raised the possibility of insider involvement, citing the scale and complexity of the operation. MobiKwik is no stranger to such incidents. In 2017, the company faced a similar fraud of around Rs 19 crore, with funds siphoned off to thousands of personal accounts, the TOI report stated.
In response to the recent breach, a MobiKwik spokesperson said,
“We are undertaking all possible efforts to recover the amount and minimize financial impact.”
The company confirmed that it is cooperating fully with banks and law enforcement agencies to track and reclaim the remaining funds.
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Meanwhile, the Nuh Police have appealed to the public to report any unexplained cash transfers they may have received on September 11 or 12. The matter is being investigated under charges of cheating and dishonest misappropriation of property.
Despite the security incident, shares of One MobiKwik Systems were slightly up 0.3% at Rs 299.01 per share. The stock has seen a 32.5% rise in the last month, showing strong investor confidence even amid the ongoing investigation.
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