Outsmarting scammers

BYTES - Lito Villanueva - The Philippine Star

Today, we hear the young ones often say “Nabudol ako!”, admitting their inability to resist temptation when shopping or falling prey to irresistible items on sale. But before “budol” gained a lighter meaning of succumbing to consumerism, it had a dark history.

For the young once, we remember the notorious budol-budol gang, a modus operandi that employs deceitful tactics involving fraud, trickery, and even hypnosis to lure or manipulate unknowing victims into giving their money or anything of value to them.

Until now, budol is often associated with scams, swindling, and other financially fraudulent activities. And while we still have unscrupulous individuals going around tricking people, the majority of such encounters now occur in the digital realm. Digital fraud has overtaken in-person fraud, with increasingly sophisticated methods to deceive innocent victims.

According to a survey on personal finance conducted by database giant Statista during the fourth quarter of 2022, 51 percent of Filipinos who had experienced digital fraud attempts were targeted with phishing attacks. Phishing/smishing scams and identity theft are still the top cyber fraud crimes in the country as of last year, both with an increase of 46 percent, based on credit agency TransUnion’s 2023 State of Omnichannel Fraud Report.

Phishing happens when a cybercriminal poses as a trusted bank or institution, sending fake links and “lookalike websites” via email, SMS, social media posts or even QR codes to users in order to trick and obtain the victims’ bank credentials, identities, credit card information, passwords, and even one-time-pins. If the scam is successful, this can result in stolen funds from bank accounts and even identity theft.

With the increasing adoption of fintech applications and the digitization of the finance industry, a larger portion of the Filipino population is joining a financially inclusive economy. Unfortunately, this positive trend also presents more avenues for fraudsters to deceive vulnerable people and exploit their hard-earned money.

Why are Filipinos vulnerable to deception?

Some will blame our trusting nature. After all, we are one of the world’s most hospitable, making us more susceptible to persuasive tactics employed by scammers. A deeper analysis will point to poverty. Many Filipinos face economic difficulties, including limited job opportunities, making us more desperate and willing to take risks for the promise of easy money. But on top of all these reasons, the lack of financial awareness and literacy poses the most dangerous implications, albeit something that we can collectively address. With the great rewards of digitization come great risks, but these are risks that we can prevent and counter.

Our strongest weapon is education.

Many Filipinos, particularly those residing in rural and remote areas, still lack fundamental financial awareness and education, leaving them vulnerable to various threats, risks, and cybercriminal activities. The absence of knowledge regarding essential security measures, such as One-Time-Pins (OTPs) and MPINS, as well as the proper protocols followed by banks who never call to verify confidential information, persists among the populace. As a result, Filipinos readily fall prey to cybercriminals masquerading as “bank agents,” driven perhaps by fear, intimidation or lack of awareness.

In light of these alarming circumstances, banks and fintech players bear both the authority and responsibility to educate the public about crucial cybersecurity practices, measures, and reminders to safeguard their information. It is imperative that our endeavors in consumer education align harmoniously with our commitment to fortify internal processes, defense technology, security measures, and risk detection capabilities to maintain digital trust among consumers.

Recognizing the urgent need to address the issue at hand, the Philippines’ first and largest fintech and digital association of startups and unicorns, FinTech Alliance.PH, has recently launched a nationwide cybersecurityc awareness and education campaign under the hashtag #WagMagpalokoMagingScamAlerto. Our primary objective is to educate millions of Filipino smartphone and online users on the threats posed by phishing scams. By fostering a culture of vigilance and alertness, we aim to empower individuals to protect themselves in the digital landscape.

FinTech Alliance.PH is spearheading the campaign in collaboration with key national government agencies such as the BSP, NBI, PNP, AMLC, SEC, IC, NPC, NTC, DICT, DTI, CIC, mobile network operators, civil society, media and consumer groups. By uniting stakeholders from various sectors in an industry-led campaign against cybercrime, we can effectively champion our stance on this matter and ensure the overall security of our digital landscape.

The massive nationwide multi-stakeholder cybersecurity education and awareness campaign was launched in response to the emergence of risks and threats to users’ safety and to ensure the sustained consumer trust on digital payments platforms. With various organizations coming from the private sector, the government, and the media, FinTech Alliance.PH hopes to combat the rising tide of cybercrime through multiple prongs and engagement strategies.

We have been advocating for a risk-based regulatory regime that ensures consumer trust and protection across all digital platforms, without hindering the development of innovation. Our collaboration with the BSP and the government continues as we strive to champion regulations that place consumer protection at the forefront. In this regard, we recognize the value of the SIM Card Registration Law as a valuable tool in our efforts. By encouraging more registered users, we can significantly reduce instances of mule accounts, bots, and fraudulent transactions.

BSP Memorandum Circular 2022-015 outlined supplementary controls that empower financial institutions to thwart unauthorized activities within their users’ bank accounts. The BSP maintains a robust investigative approach, diligently addressing incidents of fraud in banks and imposing penalties when necessary. These measures serve as a deterrent while motivating banks to prioritize anti-fraud campaigns and activities.

BSP Circular 857 is rooted in four essential financial consumer protection principles – disclosure and transparency, protection of client information, effective recourse for complaints or concerns, and fair treatment of all consumers – forms the cornerstone of our approach.

Our relentless pursuit of consumer protection aims to ensure that innovative advancements will coexist harmoniously with secure and trustworthy digital platforms.

At the end of the day, we should all be fraud fighters –outsmarting budols and scammers together, armed with our bank of knowledge.

Lito Villanueva is the Philippines’ award-winning thought leader on digital transformation and inclusive digital finance. He is the executive vice president and chief innovation and inclusion officer of RCBC. Concurrently, he is the chief digital transformation advisor for the Yuchengco Group of Companies. He is also the founding chairman of Fintech Alliance.ph, the Philippines’ largest organization of startups and unicorns that collectively generates over 90% of digital transactions volume in the country today. He was elected global chairman of the South Africa-based Alliance of Digital Finance Associations from over 30 countries. He was named among the 2023 Seamless Asia’s Top 50 Banking and Payments Leaders, Top 100 Fintech Leaders in Asia, Top 100 Filipinos on LinkedIn, Mr. Fintech of the Philippines by BizNews Asia, and Chief Innovation Officer of the Year by The Banker, among his over 70 global and regional accolades.

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