Combating Emerging Scams in the Philippines

In this article, we’ll outline how banks in the Philippines can keep their customers and the financial services sector secure and trustworthy.

The State of Fraud and Scams in the Philippines

A heartbreaking story sheds important light on the scope and severity of scams in the Philippines. It also reveals an uncomfortable truth: some scammers are victims themselves.

Authorities in the Philippines recently rescued hundreds of people from working in a scam center. Victims were forced into romance scams, gaining their targets’ trust over time for a more significant financial payout—a practice known as “pig butchering.”  

This arrest brings to light the severity and complexity that the scam threat in the Philippines takes on human beings. Criminals prey on real people both as targets and as unwilling accomplices in their schemes.

But the harrowing tales from this rescue are not the whole picture. The following data provides further insights into how prevalent scams have become.

• The number of fraud attempts in the Philippines surged by a staggering 4,500% from 2022 to 2023. This rate surpasses countries like Vietnam, Japan, and even the United States.
• The Philippine National Police Anti-Cybercrime Group (PNP-ACG) reported a 12.2% increase in cyber identity theft cases in 2023, with 2,999 incidents, up from 1,402 cases in 2022.
• In the first eight months of 2023, more than 8,000 Filipinos fell victim to various scams, resulting in a collective loss of P155 million.

Securing the Financial Landscape: BSP’s Anti-Fraud Initiatives

In response to these trends, Bangko Sentral ng Pilipinas (BSP) is taking a proactive stance against the escalating threat of fraud, implementing a multi-pronged approach that includes:

• Enhancing fraud risk management frameworks
• Educating customers on fraud prevention and awareness
• Encouraging industry-wide cooperation to prevent fraud

The BSP is ramping up its fight against fraud to protect the financial system’s integrity and maintain public trust. In 2022, the BSP advised the public to utilize multiple security features for online transactions, including multi-factor authentication (MFA), one-time PINs (OTPs), biometric authentications, and mobile banking PINs (MPIN), to bolster cybersecurity.

Looking ahead to 2024, the Philippines is poised to intensify its crackdown on phishing scams with the impending passage of the Anti-Financial Account Scamming Act (AFASA). This landmark legislation grants the BSP enhanced law enforcement powers, significantly boosting the country’s anti-cybercrime efforts. AFASA introduces robust safeguards to combat financial cybercrimes, including money mule schemes, social engineering tactics, and economic sabotage.

Notably, the law holds financial institutions accountable for ensuring the security of their clients’ accounts, mandating the implementation of effective risk management systems. By adopting a forward-thinking approach, the BSP is ensuring the financial system’s integrity and protecting the public from the ever-evolving threat of fraud. In the words of Senator Mark Villar, “Through the AFASA, we are looking forward to the future of a scam-free Philippines.”

The Philippines’ Top 3 Cybersecurity Threats

According to Senator Villar, citing data from the BSP, the top three cyber incidents in 2022 were:

1. Phishing and its variants (6,595 incidents), amounting to PHP 623 million in losses
2. Card not present or fraud (5,211 incidents), resulting in a total loss of PHP 467 million
3. Account takeover or identity theft (3,104 incidents) totaling PHP 409 million in damages

These figures emphasize the importance of enhanced cybersecurity measures to protect individuals and financial service providers from the escalating threat of cybercrime.

How Philippines Banks Can Stay Ahead of Scammers

As scams increasingly threaten consumers and banks, financial institutions need new approaches to secure the banking experience. It’s crucial to deliver a seamless and secure banking experience that doesn’t block legitimate people from opening accounts and delays legitimate customers’ transactions.

Here are two ways banks can avoid scammers, protect their reputations, and secure  their customers’ assets. 

Securing Online Account Creation

The online account creation process is a high-stakes balancing act – one that requires welcoming new customers while keeping fraudsters at bay. Invest in solutions that strike this delicate balance by harnessing the power of device and network intelligence, non-human pattern detection, and behavioral biometrics to prevent fake accounts and financial losses. 

The best part of this strategy? Legitimate customers get a seamless experience while bad actors get left at the door. 

Real-time Risk Scoring

In the digital banking space, it’s not always easy to trust the users behind each transaction. Banks need to achieve peace of mind during online sessions to ensure customers are both who they claim to be and behaving normally. Authenticating customers at each touchpoint ensures they are who they claim to be.

Banks need real-time risk-scoring solutions to analyze device intelligence, behavioral biometrics, and malware threats to prevent fraud and build customer trust – all without introducing any friction. 

The result? A secure and seamless banking experience that puts customers first. 

Uniting Against Fraud: A Collective Effort to Secure Digital Banking

Building a secure digital banking ecosystem requires collective expertise. By combining cutting-edge fraud prevention solutions with technology and specialized expertise, Philippines banks can effectively shield themselves and their customers from digital fraud threats.