MANILA, Philippines — Cybercriminals have taken advantage of more Filipinos switching to online banking and digital payments amid the protracted pandemic, prompting the need to better protect consumers against fraud, the governor of Manila said on Monday. Bangko Sentral ng Pilipinas (BSP), Benjamin Diokno.
From 2019 to 2021, consumers filed complaints with the BSP involving a total of 2 billion pesos in financial transactions, some of which involved scams as well as hacking and phishing incidents, Diokno told a hearing. in the Senate on the financial consumer protection bill.
“Without this act, we will continue to hear stories like that of Johnny, a father of two young children and business leader, who lost his hard-earned savings after a fraudster obtained his account information and made money transfers. unauthorized; or that of Marianne, a small business owner, who was charged increased amortization on her loan account. She challenged the reasonableness of the fees and charges, but ultimately lost to the financial institution,” Diokno said.
Last year alone, complaints to the BSP’s consumer assistance mechanism amounted to P540 million in transactions, Diokno said.
The BSP received 42,456 complaints from consumer victims of financial fraud in 2020 and 2021, at a time when COVID-19 plunged the economy into a recession and eliminated millions of jobs.
“The majority of these cases have been deemed closed. But the process was long and arduous. And for many complaints, the resolutions were against the consumer,” Diokno said.
Diokno said that while the COVID-19 pandemic has accelerated digitalization, the “dramatic rise” in digital financial transactions has brought “more serious risks”.
“Complaints related to the use of internet banking and mobile banking represent 45.2% of total complaints in 2021. Hackers and scammers have taken advantage of digital infrastructure and consumer vulnerability to commit crimes. Based on BSP monitoring, the increased public use of digital financial services has resulted in a wave of cyber and financial crimes,” Diokno said.
“In 2020, hacking and other malware attacks increased by 2,324% compared to the previous year, while phishing and other social engineering schemes increased by 302% compared to 2019. During the same period, account takeover or impersonation increased by 2.5%,” he added. .
The BSP’s investigation into the hack of BDO Unibank customers last month was ongoing, alongside an investigation by the National Bureau of Investigation, BSP Director Melchor Plabasan told senators.
While BDO has already returned about 700 affected accounts, the BSP will submit its own report on the hacking incident to the Monetary Board by the end of this month.
Plabasan said the BSP is strengthening its regulatory cyber defenses, in part by hiring globally certified ethical hackers to combat the rise in cyberattacks.
Diokno also said consumers complained not only about banking transactions, but also transactions with insurance players, as well as the “hundreds” of investment scams reported to the Securities and Exchange Commission (SEC). in 2019 and 2020.
“These cases could be resolved quickly once the Financial Consumer Protection Act is in place. This law will empower financial regulators such as the BSP, Insurance Commission, SEC, and Cooperative Development Authority to expedite the resolution of reasonable monetary claims in a more efficient, fair, and open manner for the benefit of consumers,” Diokno said.
To maintain consumer confidence in the financial system and deter the risk of fraud and cybercrime, Diokno said financial regulators should “penalize business practices and entities that cause serious and irreparable harm to financial consumers,” such as the proposes the bill.
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