PETALING JAYA: The Federation of Malaysian Consumers Associations (Fomca) has expressed support for a suggestion by Stampin MP Chong Chieng Jen that the government make it compulsory for banks to reimburse scam victims for their losses.
Fomca senior manager Baskaran Sithamparam said Chong’s suggestion for at least a significant portion of the losses be reimbursed made sense, unless the bank could prove the account holder was part of the scam.
Chong opined that only by making it compulsory to pay compensation to victims of online scams will banks “spend more money to upgrade the security of e-banking systems and introduce tighter SOPs and mechanisms for online cash transfers”.
According to former deputy home minister II Datuk Jonathan Yasin, there were 51,631 online scam cases with more than RM1.61 billion in losses reported from 2019 to 2021.
“It is a scary number if you think about it. More than RM1 billion in losses is too much. The financial and emotional impact on the victims can be heavy, and one could lose his life savings. The suggestion (by Chong) can move financial institutions to buck up on their cybersecurity and Firewalls, so scammers cannot easily hack into their systems,” said Baskaran.
Lawyer Kokila Vaani Vadiveloo said due to bank payment frauds such as Macau scams, Common Law has imposed a duty of care on banks not to immediately execute an order for payment in circumstances where they have been notified of potential fraud.
Such duty of care is called the “Quincecare Duty”. However, there currently seem to be no other legal remedies to reimburse victims of scams in Malaysia.
She said in January, OCBC bank in Singapore reimbursed its account holders who were victims of a phishing scam and called it “goodwill payouts”.
The scam affected at least 469 customers with losses totalling at least S$8.5 million (RM28.2 million).
She said the bank’s decision should be seen as a positive move.
“It can be an initiative for Malaysian authorities to design a fair and effective legal framework of shared responsibility, so each party is incentivised to be vigilant against scams.
“The potential of having to make goodwill payouts will also force banks to be more responsible towards their customers. Banks will have to maintain market efficiency, competitiveness, and institute customer-first policies, which in turn will attract customers.
“I believe Bank Negara Malaysia’s Credit Card Guidelines, which limit a victim’s loss to only RM250, is a good policy. However, I believe the guidelines can be tweaked further as the authorities could use them as the basis to frame comprehensive legislation to reimburse scam victims too.”
Kokila said in the UK, banks will be required to reimburse authorised push payment scam victims under government plans for a new Financial Services and Markets Bill.
“This will ensure that more people who are tricked into transferring money to a fraudster are reimbursed. Currently, many banks in the UK have pledged to a voluntary reimbursement code. But they are concerned about its inconsistent application. Under this Bill, the Payment Systems Regulator will be able to require banks to reimburse authorised push payments,” she said.
British Economic Secretary to the Treasury John Glen said the UK government is sticking up for victims of financial scams that can have a devastating impact by ensuring the regulator acts to make banks reimburse customers who have lost money through no fault of their own.
Kokila said Malaysia should be able to implement the “goodwill payment” initiative following the UK model.
“Victims can still take action to punish scammers under existing laws, such as the Computer Crimes Act 1997 and the Communications and Multimedia Act 1998, which are being used together with the Penal Code.
“Customers may also file a civil suit for damages, subject to proving the alleged scams in court,” she said.
Making it compulsory for banks to reimburse scam victims will prompt financial institutions to buck up on their cybersecurity and Firewalls, so scammers cannot easily hack into their systems. – Bernamapic
