Brahmal Vasudevan, Creador founder and CEO, says building financial literacy is crucial given the significant financial losses due to scams each year.
IT is the responsibility of social media platforms to protect their users from malicious actors due to their enormous reach and influence.
Deputy Home Minister Datuk Seri Dr Shamsul Anuar Nasarah told the Dewan Negara that there were 34,497 reported online scams involving losses of RM1.2bil in 2023. The Securities Commission Malaysia (SC) reported an alarming 3,262 scam-related complaints and enquiries. This is a significant increase of 321% from 2019.
These scammers use fake websites, social media pages and mule bank accounts for their illegal activities. They misuse the names of the SC, Bank Negara Malaysia, local celebrities and religious leaders.
Recently, even my name and that of my entities Creador and Creador Foundation were used. Thousands of victims lose their life savings every year, underscoring the urgent need for increased awareness and proactive measures.
This is not merely a local issue but a global crisis. The Global Anti-Scam Alliance reported that consumers worldwide lost nearly US$1.026 trillion (RM4.81 trillion) in scams last year. Social media platforms have a vital role to play as the interconnectivity of these platforms enables scammers to operate across borders and reach victims worldwide.
Social media platforms’ role
At the heart of the issue is the platforms’ role and responsibility in monitoring and preventing scams. First, platforms profit off advertisements. Second, the platforms’ algorithms prioritise engagement, which may promote sensational and misleading content that includes scam ads.
The advanced targeting capabilities of the platform enable scammers to reach vulnerable individuals with precision, exacerbating the problem. Re-targeting features also enable advertisers to repeatedly target users who have shown interest in their content, wearing down a user’s scepticism and causing them to be more susceptible.
Today, platforms use automated ad approval systems, only requiring deeper checks on high-risk ads. Given the rise of online scams, these systems are not adequate.
Scammers still manage to slip past these checks. When one account is banned, they create new accounts or buy accounts to run scam ads again, exposing a weakness in the design of the platform’s verification and monitoring processes.
Government action
Government intervention is crucial as individuals face challenges in acting against global platforms.
First, imposing the right regulations creates the right incentive for these platforms to ensure they make efforts to design monitoring and verification systems to combat scams. Second, legal proceedings are costly and time consuming. Third, these companies often have no physical presence in the local countries, making it difficult to lodge complaints.
In some nations and regions, more stringent regulations and proactive measures have been implemented to combat online scams.
United Kingdom: The UK’s Online Safety Bill aims to regulate content on social media platforms and protect users. The bill empowers the communications regulator, Ofcom, to fine errant companies up to 10% of their global revenue or block their services entirely in the UK.
The Financial Conduct Authority has also been engaging with social media platforms to ensure financial promotions and advertisements comply with UK regulations.
European Union: The EU’s Digital Services Act imposes strict rules on how platforms handle illegal content, including scams. It requires large platforms to conduct regular risk assessments and audits, and have preventive measures against the spread of illegal content. Non-compliance can result in fines of up to 6% of the company’s global revenue.
In Malaysia, the Malaysian Communications and Multimedia Commission is considering licensing these platforms. The plan is reportedly in the final stages and has received Cabinet approval.
This is a step in the right direction but a balanced approach is essential as we need to ensure that platforms are held accountable without stifling freedom of expression or innovation.
Individuals can protect themselves
Building financial literacy is crucial given the significant financial losses due to scams each year.
Financial literacy empowers individuals with the knowledge to recognise and avoid fraudulent schemes.
Financial literacy programmes such as Multiply by Creador Foundation, play a crucial role in this effort. Multiply offers free financial education resources, including online courses, tools and advice to help Malaysians understand and manage their finances effectively.
By understanding how scams work and learning to identify warning signs, Malaysians can make more informed financial decisions, reducing their vulnerability to such threats.
Ultimately, these social media platforms must take immediate and decisive action to control the content shared on their platforms. It’s time for them to be held accountable and create a safer online environment.
The urgency is undeniable: Act now, or more people will continue to fall victim.
This article first appeared in Star Biz7 weekly edition.
