Connexion: Are banks and telcos liable for scams?

By Joachim Ng

A one-billion ringgit loss to scammers who channel their loot overseas to avoid detection may be just a drop of water in the GDP river. By comparison, the ongoing COVID-19 pandemic has already punched a RM150 billion hole in the Malaysian economy. 

But with the surge in dishonesty, scamming networks are rapidly expanding as judged by the fact that one in five persons know someone who has been scammed or has learnt that a friend of an acquaintance has been victimised. 

In late June, police revealed several fresh cases of scammers impersonating Inland Revenue Board officers to call handphone users and demand that they settle tax arrears by transferring money to some private bank accounts. The victims were also told that serious crimes had been committed in their names. This is their standard operandi to tele-hypnotise you through fear.

Rough maths point to some 20,000 Malaysians a year being directly scammed or indirectly scammed in having to lend money to victims. As few scammers get caught, but the likelihood is that the number of victims will rise 50-fold over the next ten years with losses that may reach 50 billion ringgit a year. This is no drop in the river, but a deluge.

The two most lucrative scams are the jail scam and the investment scam. We have already written about the jail scam and how it works on fear. The investment scam works on greed: you put in US$10,000 and get returns of 10 percent every month so that after 10 months you have doubled your money. Having won your trust, the scammer persuades you to leave the US$20,000 in the ring and may convince you to top up so you get rich quick. One year later, the scammer informs you that licensing authorities are checking documents and operations have to be suspended. That’s the end of all your money.

Another two types of scam are the loan scam and the purchase scam. As they are at the moment small players in the booming scam industry, just avoid borrowing money by living within your means or don’t live. As for purchases, surely there is a neighbourhood mall that you can visit.

What makes scamming possible? The banks and the telcos. Scammers prefer that you transfer your money online via ATM because that is less traceable. Communication is almost always through handphone, although in the investment scam you may get to meet the runners who do a sales talk. Are banks and telcos liable, as their digital infrastructure makes scamming possible? Not legally.

But morally, are they liable? It’s an open question. Banks have the means to trace every scammer if they deploy artificial intelligence. Scammers never put their own accounts on the line but use purchased or rented accounts. It’s easy for a bank to detect that a customer has sold or rented out his account. The transaction pattern undergoes a dramatic change, like a slow-crawl tortoise now turned into a ninja turtle. There are many leads wherein banks can pinpoint the  scammers — if they have the will to do so.

Banks can also develop a standard operating procedure whereby any account with heavy daily transactions from a variety of sources is kept under immediate surveillance by AI (artificial intelligence) that has the capability to figure out that a scam is happening. The police can then be alerted for an arrest to be made before the victim even wakes up to the fact that he is being scammed.

AI can also be deployed to trace abnormalities in mobile conversations. Telcos assign numbers to their customers and know their locations. If a handphone user calls 30 numbers a day that belong to unconnected individuals, he must be a salesman. But if certain tele-hypnotic keywords are used in every call, then he is a scammer. AI can pinpoint the scammers easily through instant detection of these tele-hypnotic keywords. Again, it’s a question of whether telcos have the will to fight this crime. 

Bank and telco AIs can outwit any scammer. However, scamming doesn’t affect their business and hence there is nothing for them to safeguard. You can go and complain to your bank and telco that you’ve been scammed. So? They will tell you that the police station is down the road. As the law stands, it’s not their job to eliminate scammers for criminal use of digital infrastructure.

Go to your Member of Parliament and ask for a law to compel banks and telcos to deploy AI against the scammers. But here again, your MP is very busy politicking. In any case, as nobody can scam the politicians, they may have no interest in this problem. Sorry, it’s back to you watching your own sanity.



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