Rightways: Fraud

Showing posts with label Fraud. Show all posts

Thursday, November 21, 2024

Trapped in cycle of scams, victims being retargeted over 2.5 times on average

Low digital literacy blamed for Malaysia's high victamisation rates

Stay vigilant: Victims not learning from experience is among the factors contributing to them being revictimised.

KUALA LUMPUR: Malaysia has the highest rate of online fraud revictimisation in Asia, with victims being retargeted over 2.5 times on average, according to the Asia Scam Report 2024 issued by the Global Anti-Scam Alliance.

CelcomDigi head of sustainability Philip Ling said the report also revealed that Hong Kong and Thailand ranked second and third respectively.

“There are two concerns, namely victims being repeatedly targeted by scammers and their low ability to differentiate artificial intelligence scams.

“The victims don’t learn from experience. It is concerning when they fall victim again because they lack the ability to differentiate between sources ... when contacted by authorities, they often cannot tell whether the caller is real or fake,” he said, Bernama reported.

He said this to reporters after attending the Anti-Scam Engagement Session, “It’s a Matter of When”, at the Tun Abdul Razak Broadcasting and Information Institute here, which saw the participation of over 100 staff from agencies under the Communications Ministry, including the Information Department, the Malaysian National News Agency (Bernama) and RTM.

Ling said the event on Monday provided participants with an opportunity to share information and advocate against crime in a manner that is clearer and easier for the public to understand.

“We need to know that scam victims do not get an adequate support system from the people around them.

“They feel scared, ashamed and unsure of where to seek help,” he said.

One of the participants, Abdul Wahid Abdul Mutallib from Bernama, said that such programmes should be expanded, particularly to the community, as they provide valuable new information and knowledge.

“This kind of programme is very good because it can raise awareness among the public, especially as we are in the age of AI,” he said.

Echoing similar sentiments, another participant Mohd Salehuddin Mohd Kidin expressed hope that more programmes focused on online fraud awareness would be organised at the grassroots level.

“Through courses like this, participants are given exposure on how to ensure that all information is accurate before making any online transaction,” he said.

Earlier, Communications Minister Fahmi Fadzil said online fraud is one of the government’s main focuses in addressing the rise in cybercrime cases, including online gambling, cyberbullying and sexual crimes against children.

In response to this, the government has decided to implement a regulatory or licensing framework for social media and internet messaging services, effective Jan 1 next year.

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Friday, October 11, 2024

Red flag in credit card fraud

With huge profits, it is time for banks and telcos to invest more in improving their infrastructure against rising criminal activities.

IT came as a huge shock to my colleague when she was saddled with a RM38,000 credit card bill – five transactions that took place in Brazil within minutes of each other, a country she had never visited in her life.

The purported expense came when she was travelling overseas. She only discovered her credit card was missing three months after the incident when the bank asked if she had her card with her.

“I was with another colleague in Hong Kong at the time. He received the same SMS alert from his bank. We both called our banks at the same time. But the difference was his bank stopped the transaction because they could not verify it,” she said.

Despite showing proof that she was in Hong Kong at the time of the transaction, her bank could not provide her with the details of the case as they did not ask the merchant for it. The minute they found out the transactions were physical, they washed off their hands and sent her a letter which indicated she was liable for the RM38,000.

“They even tried to charge a currency conversion fee, late fee and interest on the disputed transactions. Finally, after days of frustrating exchanges with the bank, I reported the case to Bank Negara, and only now the bank is reaching out to the merchant to investigate,” my colleague told me.

Sadly, her quandary is not something new. Credit card fraud is on the rise in Malaysia. But financial institutions in general argue that if a card is lost or stolen, it is still the responsibility of the cardholder if any transactions take place. But shouldn’t the onus be on the bank to at least perform due diligence on red flag transactions?

A year ago, banks under the ambit of the Association of Banks in Malaysia (ABM) and Associa-tion of Islamic Banking and Financial Institutions Malaysia (AIBIM) launched their refreshed #JanganKenaScam awareness campaign.

At that time, the associations claimed that the campaign underscored the banking industry’s commitment to combating financial scams and preventing fraudulent banking activities.

They have since implemented several security measures to fight scams, such as migrating from the SMS One-Time-Password (OTP), tightening their fraud detection rules, imposing a cooling-off period for first-time online banking registrations, restricting secure authentications to a single device, and setting up dedicated fraud hotlines for customers.

According to the two associations, these measures have successfully prevented fraudulent transactions worth RM351mil.

But combating fraudsters is a constant battle, with the banks themselves admitting that there is an upward trend and huge losses due to credit card fraud.

Over the years, The Star has published numerous articles highlighting scams and scammers and credit card fraud.

In fact, exactly 10 years ago, we published a front-page article on fraudulent credit and debit card transactions.

We wrote: “Many consumers are questioning the assurance banks give on Internet security after discovering that their credit and debit cards have been used in unauthorised online transactions.”

Ten years later, nothing seems to have changed. If anything, things have got worse.

A study by Ipsos last December revealed that an overwhelming majority of Malaysians have encountered scams, with a distressing number reporting substantial financial harm. The study indicated that scams are exploiting the digital realm, signalling a shift in criminal tactics that jeopardises our collective economic health.

Despite the additional security measures, the current national scam awareness campaign throws the entire burden of fighting scams on poor defenceless Malaysians, many of whom are retired, in their senior age, and somewhat gullible.

This is in stark contrast to what our neighbour down south has done – Singapore is holding the telcos and banks responsible for customers who have fallen prey to scams.

The Monetary Authority of Singapore (MAS) says financial institutions and telcos will have to compensate their customers who have been cheated if they are found to have breached their responsibilities.

These responsibilities include failure by banks to send outgoing transaction alerts to consumers and telcos failing to implement a scam filter for SMSes.

The Singapore authorities acknowledged that “responsibility for preventing scams should not lie solely with consumers but also with industry stakeholders”, such as the financial institutions and telcos.

The shared responsibility should also apply here because banks and telcos, as the primary gatekeepers, must do more to protect Malaysians.

Financial institutions play a critical role as a gatekeeper against the outflow of monies due to scams, while telcos play a supporting role as infrastructure providers for SMSes.

They must incorporate more circuit breakers and track the enormity of the scams that are taking place. Tracking is not good enough; they must also act on it.

With Budget 2025 to be tabled next week, I hope our reform-minded Finance Minister introduces stronger and better measures to help Malaysians and demand more from banks and telcos.

Banks and telcos have amazing balance sheets with huge profits. It is time that they invest more to improve the infrastructure against scamming and fraud.

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Monday, November 20, 2023

Using algorithms to check fraud

New way: In addition to developing algorithms to trace money that could have ended up in the hands of fraudsters, the NFP will be able to forecast the pattern of mule accounts. — AZLINA ABDULLAH/The Star

New National Fraud Portal to streamline end-to-end scam responses

PETALING JAYA: The National Fraud Portal (NFP) will be able to predict the pattern of mule accounts as well as create algorithms to track funds that may have fallen into the hands of scammers, says Bank Negara governor Datuk Abdul Rasheed Ghaffour.

Bank Negara, he said, had decided to put more effort into curbing fraud, especially online financial fraud, as the perpetrators were not only “getting smarter by the hour” but also more sophisticated in their use of new technologies.

These efforts, said Abdul Rasheed, were also in line with the National Risk Assessment of 2023 findings that fraud was one of the five high-risk crimes beside corruption, drug trafficking, smuggling and organised crime.

ALSO READ: NFP requires certain policies to be effective, say experts

“Bank Negara is actively collaborating with PayNet and the financial industry to launch the NFP by the middle of next year.

“Building on the framework and foundations of the National Scam Response Centre (NSRC), the NFP will streamline the industry’s end-to-end scam response, from initial identification and reporting to the recovery of funds.

“This platform will enhance efficiency by automating processes, enabling a more rapid response to assist victims.

“We envision the NFP expanding to include predictive assessments of mule accounts, advanced analytics, and fund-tracing algorithms,” said Abdul Rasheed, declining to divulge further details.

ALSO READ: Budget 2024: National Scam Response Centre allocation doubled to RM20mil

PayNet is the national provider of financial market utilities, set up to build inclusive, accessible and efficient payments and financial ecosystems for Malaysia.

Bank Negara is PayNet’s single largest shareholder, with 11 of the country’s financial institutions as joint shareholders.

Abdul Rasheed said since the NSRC was launched in October 2022, it had received over 19,000 reports on scam cases, leading to the freezing of over RM60mil and the identification of 43,000 mule accounts.

The NFP currently being worked on by the central bank stems from the success of measures such as the “kill switch” for customers introduced by all major banks, he said.

“Falling victim to financial fraud is undoubtedly difficult for those affected, with some victims losing their entire life savings and struggling to regain their economic footing.

ALSO READ: National fraud portal to be ready by mid-2024 - BNM

“With the support of the banking associations, all major banks have implemented these measures, including restricting authentication apps to a single device and introducing a ‘kill switch’ for customers.

“We have observed a 58% reduction in unauthorised online banking transactions reported to the NSRC in the last five months.

“Bank Negara is now also assessing a number of additional policy enhancements on the handling of financial scams.

“This includes strengthening the requirements for financial institutions to undertake more robust investigations, adopt stronger preventive controls, and review the effectiveness of these mechanisms.

“We also plan to clarify the responsibilities of customers to protect themselves and their rights if they fall victim to fraud,” said Abdul Rasheed.

Bank Negara’s efforts to curb scams have been ongoing, with the past year seeing financial institutions migrate from the one-time password (OTP) system to having a ‘cooling-off period’ for the first-time registration of online banking services or secure devices and limiting authentication to one device per customer.

Banks now have their own scam hotlines with more advisories for their customers.

A source with Bank Negara said the portal’s secrecy was one of the key factors in ensuring that scammers were not working in tandem with its development.

“It is crucial that we are one step ahead of the scammers. The problem has always been that we are always running behind the scammers, and now we are playing catch-up,” said the source.

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Scam rampant, become a ‘scamdemic', with victims being forced to commit online crimes also believed to have set up scam centres in Malaysia

Scam rampant, become a ‘scamdemic', with victims being forced to commit online crimes also believed to have set up scam centres in Malaysia
Cause for concern: The actual number of Malaysians who have fallen victim to job scams is unknown, although the Malaysian International Hum...

Wednesday, March 15, 2023

Know how this vital law protects you from fraud

Photo: 123rf.com

CONSUMER protection laws are designed to safeguard consumers and ensure they are not subjected to fraudulent or unethical practices by businesses. One such law in Malaysia is the Financial Consumer Services Act 2013, which aims to protect consumers from unfair or deceptive practices by financial institutions.

One issue that has received increased attention in recent years is “mis-selling” by banks selling investment products to its depositors. Mis-selling refers to the practice of selling financial products to consumers that are not suitable for their needs or financial situation, which can often result in significant financial losses.

Banks have been known to engage in mis-selling by aggressively pushing investment products such as mutual funds, stocks, and insurance policies to their depositors without adequately disclosing the risks involved.

The Financial Consumer Services Act (FCSA) seeks to address this issue by imposing strict requirements on financial institutions to ensure that they act in the best interests of their clients.

FCSA requires financial institutions to disclose information about their products and services in a clear and concise manner, to ensure that consumers can make informed decisions.

It also provides for the establishment of a dispute resolution mechanism to enable consumers to seek redress for grievances.

In addition, the Act requires financial institutions to obtain sufficient information about their clients’ financial situation and investment goals before recommending any investment product.

This is particularly important if customers do not have the same level of knowledge or experience as more seasoned investors.

The Act also provides consumers with greater protection in the event of a dispute. It establishes an independent dispute resolution mechanism that is fair and impartial to resolve complaints and disputes between consumers and financial institutions.

In addition to this, the FCSA provides for compensation for consumers who have suffered losses as a result of mis-selling. Financial institutions are required to establish complaint handling procedures that enable consumers to make complaints and seek redress. These procedures must be transparent and accessible, and financial institutions must take reasonable steps to resolve complaints in a timely and efficient manner.

The FCSA also provides for enforcement measures to be taken against financial institutions that engage in unfair and deceptive practices. This includes fines, penalties, and other sanctions that may be imposed by the regulator.

These measures are designed to deter financial institutions from engaging in practices that are harmful to consumers.

It is important to note, however, that consumer protection laws are only effective when they are enforced. Financial institutions that engage in mis-selling must be held accountable for their actions, and consumers must be empowered to seek redress when they are harmed. This requires a strong and effective regulatory framework, as well as consumer education and advocacy to ensure that consumers are aware of their rights and able to protect themselves.

The FCSA is an important piece of legislation that plays a vital role in protecting consumers in the financial sector.

It provides consumers with greater transparency and clarity in financial transactions, and ensures that they are not subject to unfair and deceptive practices.

The provisions of the Act relating to the mis-selling of investment products by banks are particularly important, as this is a problem that has affected many consumers in the past.

With the FCSA in place, consumers can have greater confidence in the financial sector and can be assured that their rights and interests are being protected.

- PROF DR ONG TZE SAN School of Business and Economics Universiti Putra Malaysia

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Financial Services Act 2013 - Bank Negara Malaysia

https://www.bnm.gov.my/documents/20124/820862/Financial+Services+Act+2013.pdf

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Thursday, July 29, 2021

Lack of integrity detrimental to nation's economic growth, Malaysia's coffers run dry COVID-19 pandemic worsens

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Mustapa: Lack of integrity in institutions detrimental to nation's economic growth

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KUALA LUMPUR: No country can graduate to become high-income status without first improving governance, eliminating corruption and promoting integrity in every sector, according to Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed.

As the public is closely watching the government’s performance in areas of governance and integrity, the Auditor General’s Department must carry out its responsibility to audit all expenditures by ministries and agencies.

Amid the aspiration to be a developed nation in both the public and private sector, Mustapa admitted that issues of concerns have emerged in the country such as fraud, corruption, poor governance, weak financial management, abuse of power, and many unethical practices.

“Lack of integrity in institutions, public and private sector will be detrimental to our nation’s economic growth.

“In the current situation when we are facing tough economic and health challenges, these subjects (good governance and integrity) have become more important.

“We must be prudent in our spending. There must be zero tolerance for abuse of power and weak governance,” he said in his speech when officiating the virtual seventh annual ECoFI Symposium (AES) 2021 yesterday.

Mustapa said every sen spent on the government’s stimulus packages has to be monitored closely to ensure that the objectives of assisting the people and businesses were achieved in times of crisis, while strengthening the governance and integrity for swift economic recovery.

Meanwhile, Malaysia Association of Certified Fraud Examiners president Datuk Seri Akhbar Satar said there are numerous actions that needed to be taken in the Covid-19 response and recovery.

These include building fair framework for data openness and access; address immediate risks in the emergency public procurement, mechanisms for effective implementation, compliance and review, safeguarding fairness in the enforcement of public integrity standards and foster a culture of integrity in leadership.

“Transparency is even more crucial during a crisis. (The) lack in checks and balances can lead to abuse of public procurement as some rules and regulations have been loosened.

“It can even lead to the practice of price fixing and collusive bidding – which are normal methods used in emergency procurement,” he said. — Bernama