The MCMC is considering licensing social media platforms operating in the country. It is finalising this licensing framework with the aim to enhance online safety and address content that violates national laws, such as financial scams and fraud. — FAIHAN GHANI/The Star
SOMETHING needs to be done to eradicate financial scams on social media platforms. The world and Malaysia cannot remain silent. So far, nothing much has been done despite the hundreds of billions of dollars of financial scams on these platforms.
Scammers are happily using platforms such as Facebook, TikTok, WhatsApp, YouTube and Instagram. In these scams, sophisticated, professional-looking fake investment websites operate fraudulent trading platforms to trick victims into depositing money.
These cybercriminals are increasingly using AI technology to perpetrate financial scams by faking personalities and voices. Many of the platforms earn money from those posting the scams as they often fall under sponsored content.
This week, when private equity firm Creador and its founder Brahmal Vasudevan slammed social media giant Meta for being too slow in taking down fraudulent posts that mimicked him and his firm, it begged the question: Surely there must be more aggrieved parties globally, especially in the West? And what is being done there to fix things?
Apparently not that much, which is surprising.
In fact, the hoo-ha over the issue in Malaysia is making global news.
Last December, Malaysian Communications and Multimedia Commission (MCMC) member Derek Fernandez suggested that online platforms, including social media and messaging services, be made financially liable if they fail to screen anonymous users who use their platforms to scam others.
He noted that anonymity is a critical factor in online scams as perpetrators often use false identities, masked IP addresses or fake profiles to avoid being identified. He explained that these cybercriminals do it because they know that you are unable to identify who they are.
Therefore there must be a radical change in approach to ensure that anyone who accesses a network facility must be identifiable whenever they are online, more so when a crime has been committed, Fernandez opined.
The MCMC is also considering licensing social media platforms operating in the country. It is finalising this licensing framework with the aim to enhance online safety and address content that violates national laws, such as financial scams and fraud.
The US government is proposing new regulations to ensure online platforms adopt strict “know your customer” policies and authenticate the identities of users before allowing them to communicate.
In addition, the Federal Bureau of Investigation is coordinating with social media companies to track and prosecute online financial scams.
If Creador and Brahmal decide to sue Meta, they would be one of the first. Some have launched their suits. Australian billionaire Andrew Forrest, who alleges that Facebook’s advertising systems contributed to the success of fraudulent crypto ads featuring his image, launched his suit in the US in 2021.
More recently, four scam victims in Japan sued Facebook after being hoodwinked by fraudulent online investment ads that used images of celebrities without their consent, AFP reported.
Online hoaxes posted on Facebook and other social media channels in Japan led to 27.8 billion yen (US$178mil/RM831.68mil) in losses last year, according to the National Police Agency.
Brahmal suggests that government intervention is crucial and that the legal avenue is costly, time consuming and complicated as many of these entities often have no physical presence in local countries.
He points to the UK’s Online Safety Bill that aims to regulate content on social media platforms and the EU’s Digital Services Act that imposes strict rules on how platforms handle illegal content, including scams, as examples for Malaysia to look at.
Assoc Prof Selvakumar Manickam from Universiti Sains Malaysia posits that Malaysia’s high internet and social media rates possibly explain why the country has one of the highest online scam cases.
He also opines that victims also need to take responsibility — gullibility and greed play a role in victimisation. As for the platforms, he says they failed miserably in shielding from the ever-growing threat of online scams, including financial scams. “This glaring disparity in priorities raises serious concerns about the ethical compass and corporate responsibility of these tech giants,” he says.
Meanwhile, Harris Zainul and Samantha Khoo of the Institute of Strategic and International Studies argue that any decision to regulate social media platforms must strike a balance between protecting the public and preventing abuse, especially if the parameters of the licensing framework remain unclear.
“Genuine effort must be made to strike the delicate balance between establishing an effective licensing regime and robust safeguards to ensure that these measures do not inadvertently curtail free speech,” they write in their op-ed.
This article first appeared in Star Biz7 weekly edition.
