Online Scam Prevention: Legal Tools to Combat Scams in Malaysia

Online Scam Prevention: Legal Tools to Combat Scams in Malaysia

Due to a lack of prevention awareness, online scam activities and fraud have become rampant in Malaysia, causing billions of yearly losses.

Various bodies and agencies are making continuous efforts to curb the concerning nationwide trend of an increasing prevalence of e-commerce scams, including:

  • The Royal Malaysia Police (PDRM)
  • Bank Negara Malaysia (BNM)
  • The Malaysian Communications and Multimedia Commission (MCMC)

At the same time, it is important for consumers to enhance their financial and digital literacy to avoid becoming scam victims.

Given the scale of the problem, consumers must understand the legal remedies available if they fall victim to scams. Businesses also need to implement comprehensive fraud and online scam prevention and detection measures.

Therefore, this article will look into legal tools to combat online scam operations in Malaysia, steps consumers can take, and fraud prevention best practices for businesses.

Precautions for Consumers

As online transactions rise, consumers must take precautions to avoid scams and minimise digital footprints that expose personal data. Some tips include:

  • Never click suspicious links or provide sensitive information via email/SMS requests. Ensure to verify legitimacy directly with companies.
  • Use strong, personalised passwords consisting of a unique and complex combination of letters, numbers, and special characters. Additionally, enable multi-factor authentication where available for extra security. It is strongly advised not to use the same password for multiple accounts.
  • Monitor accounts regularly for unauthorised access and activity, and report suspicious transactions promptly.
  • Only download apps from official sources and avoid installing apps from sources that are unknown or unverified to prevent malware.
  • Avoid using public WiFi for financial transactions to avoid spoofing attacks, and check URLs using a legitimate URL checker to identify any malicious links.
  • Beware of job offers, prize claims, romance scams, and requests for upfront payment via online channels.

If scammed, cease all communication with the perpetrator immediately and alert the relevant authorities like the police, BNM, MCMC, or the Consumer Protection Department. Act quickly to limit losses.

Online Scam and Fraud Prevention for Businesses

Online Scam and Fraud Prevention for Businesses

E-commerce businesses and online platforms must also take proactive measures to combat scams and fraud. Some best practices include:

1. Use AI and Analytics for Detection

Firstly, invest in fraud detection software that uses data analytics, artificial intelligence (AI) and machine learning algorithms to monitor and accurately identify transaction patterns and customer behaviour that may indicate scams or fraud. Combine this with robust manual review processes.

2. Implement Multi-factor Authentication

Implement multi-factor authentication to access user accounts to add an extra layer of security, which is more secure than passwords alone. SMS codes or biometrics also provide added identity verification.

3. Monitor Performance Metrics

Furthermore, businesses should track metrics related to transaction declines, fraudulent account registrations, spam reviews, and other anomalies that could suggest fraudulent activity.

4. Provide Staff Training

Moreover, educate all customer-facing staff via mandatory training programmes, ensuring they are equipped to recognise signs of scams and fraud. Businesses must also create robust protocols for reporting suspicions.

5. Maintain Best Security Practices

Additionally, use encryption, SSL certificates, secure payment gateways, IP tracking, velocity checks, and other security best practices to prevent data theft and block fraudulent transactions.

6. Inform Customers of Risks

Lastly, update customers on the current trend of scams and fraud risks through advisories on websites, apps, and social media. Provide tips on protecting accounts and recognising threats to enhance and promote customer awareness of online scam prevention.

By combining vigilant security and fraud prevention measures with customer education, businesses can develop a strong, multi-layered defence against online scam activities and also reassure users. After all, proper investment in fighting scams creates trust and loyalty among customers.

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Legal Remedies for Scam Victims

If you have fallen prey to an online scam, there are several legal avenues for recourse:

1. Police Report for Criminal Charges

Scamming people is considered a criminal offence of cheating under Malaysia’s Penal Code, as scamming individuals falls within the ambit of cheating under Section 415.

If found guilty of online cheating against any individual (which includes companies, associations, or bodies of persons), one may be charged under Section 415 or 420.

Section 415 defines cheating as dishonestly inducing a person to deliver property or consent to retain stolen property. Thus, police reports can be filed to prompt an investigation and potential criminal charges.

The offender can face up to 5 years of imprisonment and/or a fine if convicted under Section 417.

Meanwhile, under Section 420, more serious cheating offences carry penalties of 1 to 10 years of imprisonment plus whipping and possible fines. In this case, courts will consider factors like deception, fraudulent intent, inducement, and harm caused.

2. Civil Lawsuits to Void Contracts

Another option is to file a civil lawsuit to render fraudulent contracts voidable under the Contracts Act 1950. The Act allows contracts obtained through deception, misrepresentation, or fraudulent acts to be rescinded.

Consequently, victims may recover any losses or advantages gained by the scammer if they rescind the contract as stipulated in Section 66. This is because the provision upholds the principle of restitution against the unjust enrichment resulting from such illegality.

3. Negligence Claims Against Banks

Moreover, when the scam involves unauthorised bank transfers, victims may have recourse against banks for negligence in preventing fraudulent transactions. Banks have a duty of care to account holders in verifying identities and instructions before allowing transfers.

If a bank fails to conduct adequate due diligence, negligence claims are possible. However, the bank’s limitation of liability is determined by the terms outlined in the contract. Plaintiffs must prove that the bank’s negligence caused identifiable losses and damages.

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The Bottom Line

In short, scams and online fraud remain a major threat to consumers and businesses in Malaysia. However, a combination of legal remedies, prevention measures, security tools, and customer awareness can combat online scam efforts.

Undeniably, consumers should be knowledgeable of their legal options to recover losses. Businesses must also make fraud and online scam prevention an absolute priority. With proper diligence, the epidemic of online scams can be mitigated effectively.

To find out more about Malaysia’s legal systems for preventing and punishing scams and other legal frameworks, visit Sabrina Hashim & Co.