EPF Account Withdrawal Fraud

A letter was circulated at EPFO establishments on October 7, 2013, with the subject that said- “Fraudulent withdrawal from the account of EPFO by furnished forged statutory returns”. The letter explained about fraudulent people making illegal withdrawals from several EPF accounts simply by submission of forged bank accounts along with KYC details or documents.

It also added that EPF officials had supported these frauds helping them withdraw money from several PF accounts especially the ones which were inoperative i.e. the ones with no activity on those accounts or where the employer no longer existed due regardless of whatever reasons.

Some of the main excerpts of that circular include:

• Point2. of the excerpts read the the investigation that was carried out lead to the discovery that these activities were being committed mostly pertaining to the establishments where the remittances were not being received for many years, and hence the records were not being updated and also the establishment had not submitted any statutory returns. To make it worse there was no pre-coverage or post-coverage inspections done in the firms and hence no claims were received and henceforth remained unsettled for a long time.
• Point3. of the excerpts also read that this investigation further revealed that the scammers submitted forged or fabricated returns in the form of Form 3A/6A, 9(R), Specimen Signature Cards and and hence submitted fictitious claims with the name of original members from among the non-members. The claims were settled simply by putting pressure on the office through all means available.

Did you note that several cases where investors found a obstacles while withdrawing their EPF money? Sometimes it even takes years before they get any news or status notification about their EPF money after which even if the payout is made, cheques sometimes go missing or are sometimes sent to the wrong address. Hence when in the wrong hands, the cheques can be simply cashed simply by opening a fake bank account. Sounds grim? The numbers of such cases are further grimly.

Some Numbers of EPF Frauds

As early as April, 2011, source reveal that there were close to 8.15 crore EPF accounts among which 3.14 crores EPF accounts were simply dormant with balances of close to Rs. 16,000. Among these dormant accounts, 2.5 crore accounts were subject to a negative balance, which explains that these accounts do not have any money in it or in other alarming terms money had been totally withdrawn.

How EPF Fraud Works ?

This is clearly for you to understand the loopholes in the EPFO system. The following detailing of how this fraudulent activity works is based on the dormants activities although scammers would soon find a way to go undetected, scamming active EPF accounts soon under such circumstances.

1. They first identify all the dormant accounts. They look for the details of the dormant EPF account. In case you have some money to spend on bribes or lots of time and patience to go through the Internet, the World Wide Web provides you enough information for you to get started. This activity feeds on people who have given their EPF numbers, name and address without noting the jeopardy they have exposed their hard-earned money to. The more conventional way is to bribe officials and get information. Generally a dormant EPF account is the one that is recognised by noting no fresh contributions within a span of 36 months. Sometimes the employer party depositing the money in the EPF account closes the main depository operations leaving the EPF account completely parentless with the money is sitting idle, waiting to be devoured by scammers. The EPF holder is supposedly either in another job waiting for the perfect moment when he will start the withdrawal or transfer process or he is working overseas hence completely forgetting to take action on his EPF account. Sometimes if the money in the EPF account is such a trivial amount that he or she does not bother to do much about it. But remember that, that little money adds up to the Rs. 16,000 crores that we spoke about before.
2. The scammers then open a fake bank account. This can be done with simply forging details through a fake PAN card, address proof etc. In a world where fake passports or even completely forged educational degrees is so easily possible regardless you are an assassin or not, forging fake KYC documents is a cake walk.
3. Then the scammers make an application for withdrawal of claims with the help of forged identity supported by the fake bank account and documents. In case if the company or employer organization is non-existent the EPFO unfortunately relies on the bank branch to authenticate the bank account.

To add salt to injury the structure of EPFO is not at all centralized and each state has its own EPFO department and hence things are controlled regionally. Hence, there are different EPF account numbers for the same person and different EPF accounts opened at different intervals. In Fact the process is the same everywhere.

Several insiders have been influenced and helped to pass the claims based on the EPFO circular itself. Corruption again is the conventional but unfortunately the most effective way to make these things happen.

What you Must Do Now?

1. If you have any old EPF accounts which might require your attention, make sure you withdraw the money or at least transfer it to your current EPF account.
2. Make sure that that you have a single active EPF account at all times.
3. Do not leave your EPF account unattended for extended periods or else be disappointed in the future.
4. If you need any information or need to move things forward, use RTI application to EPFO department to make things happen faster.
5. Also be certain to take the general precautions such as not revealing your EPF number as well as other details in public without a fair and strong reason.

You should also inform your near and dear ones to do the same, to save a part of your hard-earned money that belongs only to the one who has earned it and no one else.