#Scam Are Increasing! Learn to Protect Yourself. Banks and Regulators to Reconsider Stand on Scam Prevention

The common scams in Malaysia are:

The EPF scam

An advertisement is made via social media channels claiming EPF withdrawals can be made for you. It is a simple “help for a fee proposition”. Falsified documents are used to make the withdrawals with assurances that this is done regularly by those in need of funds and have not been found out are given. An exorbitant fee is charged when the withdrawal is made. A member who becomes a party to this and can land themselves in trouble for falsifying documents.

The second type of scam involving the EPF is one via SMS. A SMS with the message your account will be blocked in 24 hours will be sent to an unsuspecting EPF Member from a personal hand-phone number that does not have the five-digit code that EPF uses. When you call the number you are likely to provide your account details and risk your personal data being exposed.

Illegal Money Lenders Scam

A representative of an Illegal Money Lending Company will place and advertisement on a Social Media platform or via telephone offering cash with a qualification “terms and conditions apply”. The advertisement and words can appear harmless. Most people will click the link provided or answer the call to see what is about. You will be requested to provide your email address, your phone number, residential address, identity card number and a valid bank account number to proceed further. Upon completing the steps that seems harmless, the Illegal Money Lending Company will credit you the money that you wanted or that was offered into the bank account number you provided. At the same time, they will send you and email saying that based on your request the loan has been approved and the terms are attached. The terms will be at a huge disadvantage to you. Early termination will result in a penalty that is double the amount.

Investment and Money Game Scams

The Investment and Money Game Scams are sold of a higher prospective returns promised. When banks are offering a rate of 4% per annum, the investment offer a return of 10% to 15% per month. Bringing the return to 120% to 180%. The rate of return promised can even beat the borrowing rates of illegal money lenders thus making borrowing from the viable. Some even refinance their homes to participate in it. The Investment is based in some offshore tax heaven in the Bahamas or Virgin Islands. Investors are to open online accounts and remit money to the accounts directly from the domestic banking accounts. They are coached to state the reason for transfer as Offshore Investments.

The workings of these types of funds are similar to a Ponzi scheme. The returns are funded by new investors and those who have invested but have not withdrawn their returns of initial investments. The Assets and Liabilities do not match, with liabilities being greater than assets. Returns and reports are all made available on line. Investors need to be aware that any scheme that offers returns that are too good to be true is undeniably a scam that cannot be sustained.

In order not to get involved into this types of SCAM”

1. Do your due diligence and understand how the rates are unrealistic compared to returns from approved funds and bank deposits. The difference in the promised returns compared to a 12 months fixed deposits can be used as an indicator of the risk and the legitimacy of the claims made;
2. Avoid any investments that has an element of multi-level marketing. The multi level marketing channel operates on informal networks that involves friends and relatives and not licensed Financial Institutions;
3. Always do a simple reverse logic test on if real break and mortar companies can pay a maximum dividend of 10% how are this companies able to provide such high returns consecutively over a long period of time.

Love Scam or “Cat Fishing”

Love scam or Cat Fishing Once happens online. Online dating scammers establish trust, offer their victims highly profitable business deals that requires a substantial upfront investment. Other methods are for financial help, claims that the person has sent a parcel containing valuable items from abroad and someone pretending to be a customs officer will call and inform the parcel has been withheld. The victim will be persuaded to transfer to the account number the caller provides to release the parcel.

We can protect ourselves from this scam by doing the following:

1. Use Google and TinEye to do a search on the person u are meeting on line and verify who they are;
2. Watch out for those who are from overseas as it is unlikely for you to meet the person first hand immediately;
3. Be careful before committing into a relationship or probes for too much details about you too soon;
4. If the relationship is based on the need for you to provide money, please understand someone who loves you will not ask for money to show your trust towards him.

Macau Scam

Macau scams are notorious in Malaysia. These scams usually come in a few variants, in which scammers impersonate different roles. Scammers are savvy enough to “spoof” their caller IDs – and pretend to be calling from an actual institution (e.g. using your bank’s hotline number) when they’re actually calling from another number. This can blind your judgement at that time and trust it is a real call and inadvertently believe the instructions and updates are real.

To reduce the risk of being caught in Macau Scam:

1. Hang up the phone immediately when any one of the above type of scenarios are presented to you via the telephone;
2. You can then call the relevant Agencies from which the calls were made to verify and seek confirmation if attempts are made to get in touch with you instead of following the instructions of the caller

Banking Scams

Account Take Over/"Phishing" are forms of identity theft that involves unauthorized access to a user’s online accounts. The accounts are accessed fraudulently to commit financial crimes. Criminals can obtain information in a number of ways, including the dark web, spyware and malware, and phishing to allow them to make unauthorized transactions with the user’s account. The criminal act committed by people who are not visible and impersonating as the real beneficiaries of the account.

However, there are sound business practices that can prevent this. Criminals are now targeting individual customers for such crimes and the larger corporate's have made big investments in preventing such incidents. Criminals now target the unsuspecting individual account holders who are ignorant of such possibilities and attempts.

What the criminals do is to trick consumers or customers into revealing their passwords, user names and the like. Fraudsters initiate contact via email, phone calls and traditional letters. Their motive is to exploit vulnerabilities or business process’ to gain access to the company’s or individuals accounts. With the credentials the criminal can initiate money transfer to another account first and then to another country using a mule account that was mentioned above

How can this be prevented or mitigated:

1. Banks should be vigilant in protecting their customers from this type of risk. The should inform their customers actively on the types of attempts to access banking credentials of customers to develop a check and verification process in not being duped into giving up their banking credentials. Recent trends and patterns of such attempts are to be announced;
2. The regulators should publish statistics on the number of cases and the types of cases according to Banking Institutions. This will expose the internal weakness and vulnerabilities of individual institutions as this may be the elephant in the room that is missed. The public will be aware that the institution that are banking with is a high risk institution and become more averse and careful not to expose themselves to the risks;
3. Banks can take a risk based approach to tailor their customers characteristics to avoid losses, Each banking institution should implement a mechanism to prevent, detect and mitigate risks associated with account takeover and also to work with their customers to take a risk based approach; For example if a retiree is withdrawing the entire account balance of RM500,000 the processing and settlement officer or the system used to process the transaction should be able to flag a potentially unauthorized transaction. A transaction involving a substantial sum of the accounts balance that is directed to a bank outside Malaysian should be a red alert that warrants further checks; Are the cases investigated by the police?
4. Customers on the other hand must be reminded that calls from Financial Institutions are to be taken seriously and made to understand it is to protect their interest in the prevention of unauthorised transactions; Banks must specify a specific number of the person in-charge for the customers account from his home branch;
5. The Regulators can consider asking Financial Institutions to share the loss suffered by the customer. Though, it may be presumptuous to assume that some of the SCAMS are initiated by bank staff who work hand in glove with criminals it is a possibility that cannot be discounted. This brings about on how secure are customer information with banks. Are audit trails robust enough to flag unauthorized access to customer information and account balances? How can the public be convinced that their confidential information are not compromised by an inside job? Such initiatives are already in discussion with proposed changes to the Law. Channel News Asia recently published an article under the title “Consultation paper on equitable sharing of scam losses to be published in October 2023” (Dated 18.09.2023) in Singapore. In the article Singapore’s Minister of Trade and Industry Alvin Tan had stated for starters “phishing” scams will be the focus for a start. The Regulators shall consider ideas and developments from other jurisdictions such as the United Kingdom where laws are enacted for full reimbursements to scam victims. All this is no means are easy tasks or feat to establish and requires time and debate and the various interest groups will have their objections. Generally, the opinion that holds is that this is an area that needs more focus and should be treated as urgent. On line transactions are increasingly becoming a way of concluding business and a second nature to business and consumers. It is also a well accepted fact that Banks are better equipped in preventing fraud related to on line banking.
6. Lastly consumers or customers of Financial Institutions should band together to ask for more protection and sharing of the loss with the Banking Institutions. Depositors are making "banking business) possible as their deposits are used to extend loans. The losses are small for institutions that make hundreds of millions using depositor’s money can absorb the losses. In the many scams that I have read about I am not sure if anyone took the Banks to court to find a solutions and if police investigations revealed the money trails and the transit accounts and the final beneficiary. Perhaps greater consumer activism for protection of the rights of scam victims rights can help raise awareness.

Sivanesan Muthusamy is a Financial Markets Professional, Fintech and Startup Roll Out Strategist. He holds a Master's in Economics (Monetary Policy - Term Structure Analytics) and a degree in Economics (Hons.) Analytical Economics from the University of Malaya. His interests are in various fields and current issues. He is a strong believer in Malaysia and its potential.

Siva Muthusamy is a content creator under the Newswav Creator programme, where you get to express yourself, be a citizen journalist, and at the same time monetize your content & reach millions of users on Newswav. Log in to creator.newswav.com and become a Newswav Creator now!

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