New Framework Proposes To Hold Banks, Telcos Accountable for Scam Victims’ Losses
Financial institutions and telecommunication service providers might soon have to share the losses arising from scams with the victims.
According to Channel News Asia, a new proposal put forth by the Monetary Authority of Singapore (MAS) and the Infocomm Media Development Authority (IMDA) on Wednesday, 25 October wants to hold banking and telco companies accountable for scams if they fail to uphold certain responsibilities. These responsibilities include sending outgoing transaction alerts to consumers for banks and implementing scam filters in SMS messages for telcos.
The framework would focus on phishing scams first, considering that they account "for a sizeable proportion of unauthorised transactions" in Singapore. Phishing is a type of online scam, where bad actors impersonate legitimate entities to deceive victims into clicking a phishing link and stealing their credentials on a fraudulent platform.
In the proposal, the authorities said that the "responsibility for preventing scams should not lie solely with consumers but also with industry stakeholders". They go on to say that banks play "a critical role as gatekeeper against the outflow of monies due to scams", while telcos play a "supporting role" as infrastructure providers for SMS messages.
Currently, the stakeholders are answerable to regulators if they fail to implement anti-scam measures but not to scam victims who suffer losses. With the new shared responsibility framework, however, the expectation is that the stakeholders "should bear responsibility for scam loss ahead of consumers" if there are any shortcomings from their part. Only if it's found that the stakeholders carried out their duties should the consumer have to bear the full loss.
Still, the authorities stressed that informed and discerning consumers remain the first line of defence against scams. "It is therefore critical for consumers to continue to exercise vigilance at all times and not click on any unsolicited, suspicious links," said MAS and IMDA in a joint release.
When it comes to determining who'll bear the loss, the paper said a "waterfall approach" will be followed, where financial institutions have primary accountability as the custodians of consumers' money, with telcos being next in line.
Singapore is reportedly the first country to include telcos under a loss-sharing framework. "Currently, no known jurisdictions have included telecommunication operators or other infrastructure service providers in their scam reimbursement frameworks," the paper said.
The framework is targeted to be rolled out next year as authorities continue to discuss ways to improve it with consumers and stakeholders alike. It was first announced in February 2022 after about 800 OCBC customers lost a combined S$13.7 million to scammers. MAS said it only took longer than it initially anticipated due to the complexity of the issues involved.
A new proposal put forth by MAS and IMDA wants to hold banking and telco companies accountable for scams if they fail to uphold certain responsibilities.
These responsibilities include sending outgoing transaction alerts to consumers for banks and implementing scam filters in SMS messages for telcos.
Currently, the stakeholders are answerable to regulators if they fail to implement anti-scam measures but not to scam victims who suffer losses.