Foreign fraudsters love it in PHL, too

MORE Filipinos each year are being robbed of cash through otherwise legitimate transactions such as automated teller machine (ATM) withdrawals, credit-card purchases and online banking, as fraud has increased alongside the country’s growing prosperity.

“Fraud is growing at a rate of about 50 percent year-on-year in the Philippines in the last three years, and it will continue at that rate,” Burton Crapps, local country manager of US-based fraud-management company Fico, said on Tuesday.

Crapps cited three main reasons driving the influx of foreign fraudsters into Philippine shores: the strong growth in financial cards (ATM, debit, credit), high overseas remittance rate, and increasing popularity of mobile banking.

“It’s pretty simple. The exciting growth that is happening here in the Philippines is wonderful for all of us: I’m loving it, you’re loving it, the banks are loving it, the central bank is loving it, and the fraudsters are loving it,” Crapps said.

Fico operations in the Philippines have surged by 250 percent since it started in 2010, as banks invest more in security measures to combat rising fraud, he said.

“We are projecting about an average of 180-percent to 210-percent growth every year over the next three years for us here in the Philippines. That’s how big the market is for us here,” Crapps said, adding that the Philippines is only second to China in terms of the need for security measures for financial institutions.

Citing local bank clients, Fico estimated that Filipinos had been fleeced of millions of pesos over the last two years.

The myriad ways through which individuals are robbed include card skimming, where thieves install card readers and other devices on ATMs to steal data and money.

Another scheme is the “card not present fraud,” which occurs when information coursed through online or phone purchases is stolen.

A third is the retail point-of-sale fraud, where information and money are stolen after using cards to pay for small purchases such as in malls, restaurants and gas stations, among other places.

What could be cause for concern, according to Fico, is that fraudulent activities in the Philippines is now being done by more sophisticated groups.

“Foreign syndicates are the primary source of this problem. These are organized highly collateralized, highly financed foreign syndicates that are doing this. In fact, they are bigger than the banks. It’s not just casual fraud,” Crapps said.

To combat theft, Crapps noted that banks have been investing in technology lately.

“The banks here in the Philippines are aggressively trying to address this issue,” he said.

“The systems that the banks have are not really bad. It’s just that they are unable to keep up with the growth and unable to keep up with the fraud that is going on,” he added.

Market leader Banco de Oro Unibank Inc, for one, is working closely with the authorities to install the necessary fortifications

“We have been working closely with the concerned authorities to protect our clients and the general public,” BDO said in a statement.

“This is an industry-wide problem affecting all the banks and is not limited to BDO and its systems,” the country’s biggest lender said.

Measures undertaken include installation of pin pad shields, use of enhanced card slots, daily inspections and other security monitoring.

Antonio C. Moncupa Jr., chief executive of East West Bank Banking Corp, however, said the bank has yet to see “any material increase in skimming and phishing.”

“Nevertheless, we continue to be vigilant that our anti-fraud tools and Internet banking security are up to date and effective,” he said.

Bangko Sentral ng Pilipinas Deputy Governor Nestor A. Espenilla Jr. agreed, telling InterAksyon.com earlier that the country witnessed no such surge in fraudulent activity in the past year. –InterAksyon.com

(Tarragona | dreamstime.com)