A silver lining of the COVID-19 pandemic was that it brought the Philippine financial system to fully embrace digitalization. More banks have begun to acknowledge the benefits that it brings Filipinos across the country: that is, that their customers can now access financial services conveniently, easily, and efficiently through any of their devices.

Yet this newfound way of life comes at the price of increased risk. Alongside the rise of digital financial services during the pandemic, the incidents of fraud and scams have also grown.

According to the Bangko Sentral ng Pilipinas, fraud and scam complaints involving a total of P2 billion worth of financial transactions were reported from 2019 to 2021. Last year alone, the complaints received by the BSP’s consumer assistance mechanism amounted to P540 million in transactions.

This reflects another observation made by the Credit Card Association of the Philippines (CCAP), which found that credit card fraud in the Philippines rose 21% since the coronavirus pandemic, with many incidents involving scammers gaining access to one-time passwords to transact online.

“The industry has been experiencing high volumes of fraud cases causing financial detriment. These perpetrators have carried out fraud by using the various digital payment platforms,” Alex Ilagan, CCAP executive director, said in a statement.

Protecting yourself from frauds and scams

The rapid adoption and evolution of digital technology has made it that much harder for consumers to protect themselves from malicious actors. That is not to say that banks and credit card companies have been slack in their efforts in protecting consumers.

EMV chips in credit cards, for instance, are now a global standard microchip that credit card providers utilize to reduce instances of credit card fraud in the country. Unlike the older technology which used a magnetic strip, the EMV chip generates a unique transaction code every time the card is used for a purchase. Fraudsters that attempt to steal your information through one transaction, such as via skimming, will fail as the transaction data will not be usable beyond the payment it was generated for.

The BSP has also been committed to ensuring that every financial institution it supervises offering electronic payments and financial services must undergo the BSP’s approval process, which requires rigorous security controls and consumer protection mechanisms. Furthermore, the central bank has been developing a circular requiring the adoption of strong fraud management systems and temporary freezes on funds to minimize losses from fraudulent activities.

Yet, while financial institutions have made every effort to secure their channels from cyberattacks, the most common incidents of frauds and scams simply involve trickery and deception to cheat victims out of their money.

“Fraudsters will usually pose as someone they are not. They prey on people’s emotions to manipulate our human tendency to trust. They tell stories that either resonate to our sensitive side or to our desires and aspirations. Then they employ tactics to induce pressure,” the BSP warned.

The central bank added that fraudsters will also sometimes promise the prospect of instant and guaranteed wealth to trick people into revealing sensitive information. ‘Boiler room’ scams are examples.

According to the Philippine National Police (PNP) Anti-Cybercrime Group, the term boiler room refers to an outbound call center selling questionable investments by telephone. It typically refers to a room where salesmen work using unfair, dishonest sales tactics, sometimes selling foreign currency stock, private placements or committing outright stock fraud. To build trust with their victims, fraudsters usually claim that others have already joined or have received the benefits of what they are offering, that they have special expertise or that they are affiliated with a reputable agency.

“The brokers of the boiler room actually ‘create’ a market by attracting buyers, whose demand for the stock drives up the price; this gives the owners of the company enough volume to sell their shares at a profit, a form of pump and dump operation where the original investors profit at the expense of the investors taken in by the boiler room operation,” the PNP explained.

Vigilance remains the best practice to protect oneself, and it should now extend to financial transactions made online or through electronic channels. The CCAP recommends that when shopping online, “look for ‘https’ or a padlock symbol on the leftmost part of the URL bar. This signifies that the website has an SSL Certificate, which guarantees that any sensitive data you send can only be viewed by the intended recipient. SSL Certificates in websites protect any packets of data transferred from its website users via contact forms, buttons, text fields, or any information inputted and submitted into the site.”

“Every time your credit card bill arrives, thoroughly scrutinize your transactions. If you see any errors or unauthorized transactions, contact your bank immediately. The sooner you report these discrepancies bank, the faster you can stop the fraudster from using your credit card,” the organization added.

For suspicious investment schemes, you may contact the Enforcement and Investor Protection Department of the SEC through e-mail at epd@sec.gov.ph or through landline at (02) 8818-6337.

For malicious messages, lodge reports to the NBI Anti-Fraud Division at (02) 8525-4093 or e-mail at afad@nbi.gov.ph. You may also send a message through the NBI’s website at www.nbi.gov.ph or their official Facebook account. You may also report these incidents to the PNP Anti-Crime Group (PNP-ACG) through www.pnpacg.ph or hotline number at (02) 8723-0401 local 5313.

The Department of Finance (DoF) has also opened its online channels for netizens to report any posts, advertisements, and messages containing false information. You may send screenshots of the advertisements and communication from suspected to the DoF Facebook Messenger account: m.me/DOFPH. — Bjorn Biel M. Beltran