ONLINE financial fraud has become more prevalent across the globe as businesses adopt digital modes of payments and transactions. Malaysia is not spared from this growing threat.
Fraudsters are continuously evolving their approaches to exploit the vulnerabilities of the current prevention measures in place, many of whom are targeting the financial sector.
Those who fall prey to financial scams or fraud come from all walks of life including government servants, lecturers, doctors and even successful businesspeople, either involving illegal activities or lured into fraudulent schemes that guarantee lucrative returns.
According to the Bukit Aman Commercial Crimes Investigation Department, online crime cases increased by 37% from January to November this year compared to the same period last year.
The number of cases increased from 23,608 to 32,366, with a total loss of RM1.13 billion, a 46% increase from last year, the department said.
“This indicates that financial fraud and scams pose a significant risk to our nation, where the direct impact of organised financial crime can lead to substantial financial losses,” Deputy Prime Minister Fadillah Yusof was quoted as saying.
Police believe the real figures involving victims and total losses are just the “tip of the iceberg” as many cases were unreported as the victims were ashamed to lodge a police report given their job and social status.
The results of a study released by Ipsos Malaysia on December 19 revealed that less than 50% of scam victims in the country seek help from the authorities, with a silent minority taking no action at all.
Given the current situation, experts opined that the relevant act should be amended, especially in terms of its punishment, as they said, stronger preventive measures should be undertaken to tackle online fraud.
At the same time, they also called for efforts to intensify public awareness campaigns against online crime.
Lack of knowledge
Ts Syahrul Nizam Junaini, a senior lecturer at the Faculty of Computer Science and Information Technology, Universiti Malaysia Sarawak, said most cyber users lack the knowledge in detecting legitimate and fake or malicious websites, hence making them vulnerable to fraud.
“A previous study showed that 78.5% of the Malaysian population are active social media users. This means that more financial transactions are conducted online.
“This situation provides more opportunities for fraudsters to explore and exploit, by entrapping users of websites and online banking applications as well as e-wallet and e-commerce platforms without security measures for customers,” he said.
Shahrul said a strong cybersecurity infrastructure is essential to defend against cyberattacks as fraudsters can take advantage of loopholes in the system.
“We are cognisant of the fact that this crime is focused on WhatsApp, Telegram and short message service (SMS) as these applications are widely used worldwide with millions of active users in Malaysia.
“Fraudsters also use similar applications, and as such, it is difficult for us to detect them as these bad hats have also registered their phone numbers by using fake WhatsApp or Telegram accounts,” he added.
He said every year, 99% of legitimate information is received by the public through WhatsApp, but when 1% of fake information with fraud elements emerge, many who are vulnerable to misinformation will then share them with others.
Ipsos Malaysia in its survey also said that three-quarters of the country’s population was targeted, with an upsurge in the last quarter highlighting widespread vulnerability as 76% of 1,000 respondents encountered scams.
A total of 51% of respondents reported that they encountered scams in the past three months, 26% in the past month and 14% in the past week.
Don’t be ashamed to lodge a complaint
Syahrul also urged those who have fallen victim to financial fraud to step forward by lodging their complaints to the authorities.
He said the shame and stigma, as well as the refusal to believe that they had been conned by fraudsters, prevent victims from reporting the crime.
According to the Ipsos Malaysia survey, only 48% of 657 respondents who fell victim to a scam with financial loss or almost fell victim to a scam but realised it before any loss occurred, reported it to the authorities. However, 12% did not take any action.
“Besides that, the victims might not know the procedures in making reports and lacked the awareness on this aspect, and as such they were hesitant or felt that the procedures were rather complicated, and in the end, they decided against making the report.
“Don’t stay silent. Victims only need to go to the relevant agency in their respective areas including the police station and their banks. Without the report, how will the authorities conduct an investigation?” he asked.
He said this is because data from every report received will be streamlined with other authorities including the National Scam Response Centre (NSRC), Bank Negara Malaysia as well as the Malaysian Communications and Multimedia Commission (MCMC).
Sophisticated technology
Senior lecturer at the Faculty of Science and Technology, Universiti Sains Islam Malaysia Azuan Ahmad said in the ever-evolving digital age, diverse applications have been developed in line with the latest technological trends, giving room for scammers to exploit and manipulate their victims for financial gain.
The availability of various apps which can easily be downloaded provides an easy gateway for fraudsters to access personal information including the victim’s financial details, he said.
“Being online more often increases exposure to the risk of cyber fraud as indirectly, more of our personal data are available in the cyber world and if data security is not given importance, it will only expose users to risks of thefts and data leakage.
“This allows financial scammers to access the victims’ information by using the data as bait to win the confidence of the victims before defrauding them,” he said.
Azuan also said that of late, these swindlers have also leveraged mobile applications as their modus operandi, including impersonating as a trusted individual or authority, such as the police.
“For example, by just having the full name of a victim, the fraudster can detect other personal data including the identity card number, house address, registration vehicle number and other additional data, and with the details, the victim can easily be deceived, believing that the fraudster is from a trusted authority.
“Some scammers have also developed various fake applications and after downloading the app or clicking the link, the fraudster will be able to access the victims’ banking app. Some of these fraudsters use bank logos which appear real to convince victims that they are from the legitimate banking institution,” he said.
Vulnerable folk
Azuan also said vulnerable people in society and those lacking knowledge on the digital and cyber world are some of the factors contributing to the rise in online financial fraud in the country.
“The smart fraudster knows how to manipulate emotions and take advantage of the victims’ trust and exploit their fears – especially panicky individuals.
“Out of panic, the victim would disclose their financial information including banking data to the scammer and in the end, the victim falls prey to the perpetrator’s tactics,” he said, adding that due to a lack of knowledge on cyberthreats, the public will continue to be exposed to the crime.
In this regard, he urged the relevant authorities to step up their public awareness campaigns in addition to widely disseminating the latest modus operandi of online fraudsters.
He also called on smartphone users to download applications such as Whoscall and Truecaller that allow them to identify who the caller is, hence protecting them from fraudulent calls.
Scam response centre
Azuan also described the NSRC, which was set up last year, as the best platform to combat financial scams in a more holistic and integrated manner.
The centre, he added, would consolidate resources and expertise from the National Anti-Financial Crime Centre, the Royal Malaysia Police, MCMC as well as financial institutions and the telecommunications industry.
“Besides creating awareness on online financial crimes, NSRC through the relevant agencies are actively conducting operations to detect ‘keldai akaun’ (mule accounts) that are used as the medium for money transactions by fraudsters.
“As a one-stop centre dealing with scams, NSRC is recognised for being able to conduct swift and integrated action towards online financial fraud including coordinating faster tracing of stolen funds and taking enforcement action against criminals,” he added.
Since its inception on October 12, 2022 to November 30 this year, calls made to the NSRC involved losses amounting to RM173 million. Of the total, the centre managed to block the transaction of RM33 million. – Bernama, December 29, 2023.
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