CREDIT CARD fraud incidents have risen 21% during the pandemic with the more extensive use of digital payment channels, according to the Credit Card Association of the Philippines (CCAP).

As a result, the card industry is calling for stricter rules governing mobile phone subscriber identity module (SIM) registrations to deter fraud. Legislators are currently considering a bill that would regulate SIM card registrations.

The most common incidents involve what the CCAP calls the “virtual account takeover,” in which perpetrators of the fraud take over and gain access to one-time passwords in order to perform valid transactions.

Separately, the CCAP urged telecommunication firms to implement stricter Know-Your-Customer processes for new prepaid and post-paid users. They specifically noted the need for a more rigorous ID verification process when customers request to change mobile numbers when they declare a lost or stolen mobile unit.

“We respectfully request that this be addressed urgently. Perpetration of a successful unauthorized SIM swap will affect both the telcos’ and the banks’ customers, resulting in financial losses, loss of public trust and confidence, and close scrutiny from the regulators,” CCAP Executive Director Alex G. Ilagan said in letters addressed to Globe Telecom, Inc. and Smart Communications, Inc., the National Telecommunications Commission (NTC), and the House of Representatives.

House Bill 5793 and its counterpart Senate Bill 2395, which requires telco to require registration of SIM cards, both passed third and final reading last month.

“To date, there are no existing laws which protect the consumers from this mode of attack from fraudsters. We believe that the passage and implementation of this law will greatly deter (such) activities… as they will now have accountability from the use of… registered SIM cards,” Mr. Ilagan said.

The group also called on the NTC to devise a formal recourse mechanism for consumers who wish to report numbers that have been used for carrying out financial crime.

“This standardized reporting mechanism is absent in today’s environment which leads (victims to be reluctant) to properly report incidents to their respective banks or telecommunication providers,” Mr. Ilagan said.

The central bank has said that the most common types of fraud incidents related to credit cards include unauthorized or disputed transactions that can be traced to the disclosure of personal information and phishing e-mails, as well as breach of personal account information in the use of the OTP by a person falsely representing a bank employee.

“Combating financial crime is a shared responsibility among all concerned industries, as well as the government; thus, we are asking for help in this continuous fight against these progressive fraudsters,” he said. — Luz Wendy T. Noble