Opinion | Strengthening consumer protection against scams
Dr Paul Selva Raj
THE Federation of Malaysian Consumers Association (Fomca) has expressed strong support for the establishment of a National Fraud Portal, emphasising its potential to significantly enhance the protection of scam victims’ interests and well-being.
According to Bank Negara Malaysia (BNM), this portal will enable swift tracking of stolen funds across the financial system, aiding in the prevention of further unauthorised transactions and increasing the likelihood of fund recovery.
As the financial system in Malaysia and globally becomes increasingly digital, the reliance on technology grows. Unfortunately, cybercriminals often exploit these technological advancements to expand their scamming tactics.
Memento Maxima Digital MarketingBNM governor Shaik Abdul Rasheed Abdul Ghaffour has stressed that the fight against fraud is a long and challenging journey. He outlined three key themes in the effort to combat financial fraud: Optimising technology, fostering collaboration and empowering consumers.
BNM has already implemented measures to combat financial scams, including directives to ensure fair treatment for victims of unauthorised online banking transactions. The policy emphasises the importance of thorough fraud investigations, transparency and shared accountability between financial institutions and their customers.
The CEO of PayNet, the other key partner of the National Fraud Portal, noted that “leveraging on the infrastructure and fostering deeper industry collaboration, would bolster the resilience of Malaysia’s digital payment ecosystem and ensure that every financial institution is equipped with the tools and coordination necessary to safeguard the public from financial threats”.
Consumers are often unfairly blamed for falling victim to scams, with banks frequently pointing fingers at customers for fraud. Victims are sometimes labelled as irresponsible or lacking the intelligence to protect themselves. However, as cybersecurity experts emphasise, falling for a scam is not a matter of intelligence or irresponsibility.
Scams are meticulously crafted using a blend of trust, deception and the challenge of staying perfectly safe online. It can be incredibly difficult to distinguish between genuine and fraudulent messages. This explains why not only “ordinary” consumers, but also professionals and experts can become scam victims.
As the financial services regulator, BNM has imposed several measures and guidelines that banks must follow to safeguard consumers from scams. Five of these measures include migrating from SMS one-time passwords to a more secure authentication method, tightening banks’ fraud detection rules, implementing a verification and cooling-off period for first-time enrolment in
e-banking services, allowing only a single mobile device or secure device to be registered per account and establishing a 24/7 dedicated complaint channel for customers.
How effective are these measures?
These measures have significantly reduced unauthorised transactions in the banking
sector, demonstrating that customers are not solely to blame.
The measures imposed by BNM to enhance consumer safety have yielded substantial positive results. Without these regulations, banks might have been reluctant to implement protective measures, leaving customers vulnerable to weak and ineffective consumer protections. Therefore, banks must share the responsibility in safeguarding consumers.
In Singapore, the Monetary Authority of Singapore has established clear and well-defined responsibilities for financial institutions and telecommunications companies in combating scams. Failure to meet these obligations can make these companies liable for compensating their customers.
Fomca recommends that BNM develop well-defined anti-scam standards that banks must strictly adhere to. In cases where a customer
falls victim to a scam, banks should share responsibility and bear part of the consumer’s losses if they fail to meet these standards.
Holding banks accountable would incentivise financial institutions to implement the proposed measures and take additional steps to enhance consumer protection.
Fomca calls on the National Fraud Portal to first audit banks’ implementation of the five measures and other guidelines imposed by BNM to ensure full compliance.
One particular area of concern is the 24/7 call centre. Consumers have reported being “passed around“, blamed for their “irresponsibility“ and often receiving inadequate support as scam victims. We believe the effectiveness of bank call centres needs to be significantly improved.
It is recommended that the National Scam Centre or its call centre operate 24/7, rather than only during working hours, to ensure consumers can access assistance at any time of day.
Additionally, the effectiveness of the National Scam Centre should be regularly evaluated to enhance its capabilities and reach. This would enable the centre to play a more proactive role in scam prevention and in helping consumers recover financial losses from scams.
Strengthening the National Fraud Portal would further bolster its capacity to recover funds lost by scam victims. As BNM’s governor emphasised, consumer empowerment is a crucial aspect of preventing scams. More needs to be done to ensure that consumers are adequately equipped to protect themselves.
Although many parties, including banks, claim they are making significant efforts to educate consumers, the alarming rise in scams suggests that these efforts are insufficient.
The effectiveness of literacy programmes should be assessed not just by the number of initiatives undertaken, but by how well these programmes empower consumers to change their behaviour and better protect themselves. The focus should shift from outputs (for example, the number of programmes) to outcomes (for example, changes in behaviour towards self-protection).
The formation of the National Fraud Portal is a critical step forward in scam prevention and financial recovery of monies lost by consumers through scams.
As mentioned by the BNM governor, we hope that through optimising technology, fostering collaboration and empowering consumers, scams in Malaysia can be reduced and victims can recover their losses.
Dr Paul Selva Raj
Deputy President
Fomca
THE EDITOR
@[email protected]
