COVID-19: The Evolution of Scams in Asia-Pacific

By Subhashish Bose

In 2020, one in three people in Southeast Asia experienced online fraud amid a boom in online shopping and activity due to the COVID-19 pandemic. Asia-Pacific already has the highest number of internet users in the world, so the opportunities for scammers were already aplenty before the crisis of 2020.

Cybercriminals were quick to take advantage of the crisis in the region for their own nefarious gains. For example, The Singapore Police Force (SPF) observed a 163 percent surge in online scams coinciding with the onset of COVID-19. The increase in online activities served as the perfect backdrop for increasingly nuanced racketeering efforts by financial crime syndicates who targeted everything from the boom in deliveries, to interest in the stock market and even the vaccine program to fleece consumers.

Scams in the time of the coronavirus

With banks offering record-low interest rates, consumers are turning to alternative places to put their money. Scammers lure consumers with all sorts of money-making opportunities promising high returns. In Singapore alone, the current value of funds that had been swindled as a result of investment scam cases stands at S$69.5 million—an almost two-fold increase from the previous year.

Similarly, the adoption of digital transactions due to the growth in e-commerce has also presented some weak points for scammers to attack. Unsurprisingly, purchase scams – where goods paid for are never delivered - have also seen a spike in recent times—with e-commerce scams being the most reported scam in Singapore in 2020.

The pandemic has also contributed to the emergence of new scams. Delivery scams have risen as a new way to siphon funds. The scam works by sending consumers emails or SMSs impersonating delivery services to either inject malware onto a system or to obtain personal information under the guise of redirecting unsuccessfully delivered parcels that had never existed in the first place.

As COVID-19 vaccination programmes ramp up globally, there has also been a proliferation of fraudulent sites stealing people’s money and data under the guise of providing direct access to vaccines. Fraudsters are reaching out directly to an anxious public, running ads for COVID-19 vaccines and test-kits on social media sites like Facebook. Some are using outbound sales teams to call consumers, offering home delivery of the vaccine after payment is made up-front. Predatory criminals are also issuing a fleet of text messages inviting recipients to set up an appointment for a coronavirus vaccination, or urgent offers of “leftover” vaccine supposedly up for grabs.

The challenge for financial institutions

Throughout the pandemic, one of the biggest demands on fraud and financial crime technology has been the ability to adjust quickly. Fraud detection algorithms based solely on pre-pandemic purchase behavior might face difficulties accurately predicting consumer behavior due to the rapidly shifting environment and current uncertainties. Apart from the financial costs of missing fraud, these systems could also produce many false positives that inaccurately identify legitimate customer behavior as suspected fraud, frustrating the customer and creating friction around the use of payment cards.

To further complicate matters, the pandemic has also accelerated the adoption of real-time payments due to restricted facetime and greater demand for contactless payments. While the convenience of real-time payments is great news for customers, it has also opened a new window of opportunity for fraudsters. This is concerning as 4 out of 5 APAC banks (78%) say the introduction of real-time payment platforms in their country has resulted in increased fraud losses, due to not having the most advanced fraud analytics in place.

Prepare for the unprecedented

To keep scams and fraud at bay, financial institutions require purpose-built solutions that can adapt and prepare for unprecedented events. A layered fraud defence framework with advanced behavioural analytics for instance, can be deployed to detect out-of-pattern payments. Using two-way customer communication services can also help financial institutions demonstrate appropriate scam interventions before it’s too late. Plus, by leveraging artificial intelligence, such as tapping into robotic process automation (RPA) banks can filter out scams through typically used keywords to help relieve some of the workload on personnel. This will allow them to focus on high-value tasks while automating routine decisions and workflows.

Aside from the necessary technological investments, cross industry collaborations and partnerships between financial institutions and regulators can go a long way in protecting consumers. For instance, the launch of Project Frontier, a collaborative effort between the Singapore Police Force and 20 financial institutions has helped to combat fraudulent activities by reducing the time needed to freeze scammers’ bank accounts to under 24 hours.

Regulatory bodies can supplement technological efforts with ramped up efforts to bolster consumer awareness of the evolving scam landscape. Apart from launching ScamShield, a mobile app that filters out scams based on keywords, the SPF also distributes public advisories through media alerts and social media channels. These advisories keep consumers up-to-date with the latest scams and recommendations on how they can actively protect themselves.

With the increase in digital activities, geographical borders are quickly becoming irrelevant to scammers, as joint operations among scammers can be launched without the need for a physical presence on-ground. Hence, countries must work in tandem to improve detection capabilities on a transnational scale to effectively tackle fraud.

Financial crime syndicates are constantly innovating new ways of infiltrating financial systems to illegally profit. There is simply no room for complacency. Financial institutions, regulators and consumers, all must remain vigilant and work collaboratively to adapt to the ever-evolving fraud and financial crime threats.

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