Banks & Telcos May Need To Reimburse Scam Victims If Found To Be Negligent
Banks and telcos in Singapore may soon have to reimburse scam victims if they are found to have been negligent.
This was mentioned in the Monetary Authority of Singapore (MAS) and Infocomm Media Development Authority (IMDA)’s new proposed framework released on Wednesday (25 Oct).
It aims to strengthen the direct accountability of these institutions to consumers.
As such, it lays out the duties of these entities to mitigate the risk consumers face against phishing scams.
Under the proposed framework, payouts to scam victims may be mandatory if financial institutions and telcos breach these duties.
Shared responsibility of banks & telcos in scam cases
On Wednesday (25 Oct), the MAS and IMDA shared that they have proposed a new Shared Responsibility Framework (SRF) for phishing scams.
Source: Getty Images via CNBC
It sets out the duties of financial institutions, such as banks, and telcos to mitigate the risk consumers face against such scams.
Additionally, it will make payouts to scam victims mandatory should these entities breach their duties.
The SRF will focus on a defined scope of phishing scams, said MAS.
Specifically, it targets cases where scammers deceive consumers into revealing their account credentials while impersonating legitimate entities, leading to unauthorised transactions.
However, it will not cover malware scams.
Places onus on financial institutes & communication providers
This places the onus not only on the banks but on the telcos as well, considering that the latter plays a role in facilitating scam SMSes.
In 2022, the Payments Council originally proposed for financial institutions to share most of the losses from phishing scams.
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This new SRF covers banks — the custodians of consumers’ money — and telcos, who play a supporting role as the communication channel providers for financial institutions.
The inclusion of telcos is due to the prevalence of digitally enabled scams resulting in unauthorised transactions.
New framework aims to strengthen direct accountability & incentivise anti-scam measures
The SRF aims to strengthen the direct accountability of financial institutions and telcos to consumers, MAS added.
“It sets out discrete and well-defined duties for financial institutions and telcos to mitigate the risk of consumers falling prey to phishing scams.”
These duties will include:
- For financial institutions — failure to send outgoing transaction notifications to consumers
- For telcos — failure to implement a scam filter
Breaches of these duties would hence be the starting point for determining who is responsible for losses under the framework.
Therefore, it incentivises banks and telcos to uphold the desired standards of anti-scam controls strictly.
Also Read: Elderly Man Targeted By Love Scam Attempts To Transfer S$3K, POSB Staff Calls Police
Elderly Man Targeted By Love Scam Attempts To Transfer S$3K, POSB Staff Calls Police
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Featured image adapted from MakeUseOf, for illustration purposes only.
