All bad things come from good things. The digital economy is growing fast – but so are the risks. The rise of e-wallet and digital banking usage in the country, in this instance, also leads to the rise of cyber crime.
While the speed and convenience of e-wallets make transactions quick and easy, they also make them targets for cyber criminals and fraudsters.
Accenture reports that digital payment fraud has grown to 25% during the first three years of the 2020s, and about 3.6% of the global GDP is lost to fraud each year. Phishing fraud attacks have been experienced by various merchants every year, and some financial services customers close their accounts due to this.
The Philippines is no exception when it comes to cyber fraud cases. In 2024, the country is placed at the second highest for the suspected digital fraud rate among the global markets – following India at 19.0%.
The unfortunate victims of cyber fraud
In a survey conducted between November and December 2024, around 74% of Filipinos have reported to be targeted by various fraud schemes, and 34% of them reported losing money due to the aforementioned tactics.
The reported average loss due to these attacks exceeds PHP 44,700 (~USD 768), which constitutes at least over two months of salary for most Filipino households, as said by Yogesh Daware, chief commercial office at TransUnion Philippines.
How do these cyber frauds work?
Digital fraud scams always start with social engineering attacks.
Fraudsters use tactics such as phishing or smishing messages, wherein cyber criminals impersonate themselves as other people in order to gain trust to the users and trick them into handing over their credentials.
These tactics are not only limited to emails or text messages however; cyber criminals can set up bogus stores in order to obtain their customers’ credentials and payment information. In some cases, cyber criminals can go to the dark web where they can buy and sell stolen or compromised credentials.
Cyber criminals also make use of modern technology to steal a person’s information, through the use of malware. These malicious applications include infostealers, man-in-the-middle and man-in-the-browser attacks.
Cyber criminals take advantage of digital wallets to commit types of fraud, making use of stolen and/or compromised credentials to bypass security detections and access sensitive information. Among the most prominent methods include credit card fraud, peer-to-peer (P2P) payment fraud, identity theft, and money laundering.
A push to curb the cyber fraud threat
The Philippines’ push to curb the spread of cyber fraud and other cybercrimes has been an ongoing battle since the beginning of the millennium.
The earliest progenitor against cybercrime in the country was in the year 2000, when then-President Joseph Estrada signed the Philippine E-Commerce Act (Republic Act No. 8792), following the aftermath of the ILOVEYOU worm, which had also affected computers all over the globe.
Over the years, other laws have been passed to address the issue of digital fraud.
The Cybercrime Prevention Act of 2012 (Republic Act 10175) penalizes hacking, online identity theft, system interference, and online swindling. The Anti-Financial Account Scamming Act (Republic Act 12010) targets money mules, phishing, and vishing schemes. Finally, the Data Privacy Act of 2012 (Republic Act 10173) ensures entities protecting consumer data are legally held liable for breaches that expose personal information.
The Presidential Anti-Organized Crime Commission (PAOCC) cracked down an online scam circle last year, and as of now, with the support of the United Nations Organization on Drugs and Crime (UNODC), the organization implemented new regulations banning POGOs, which were often used as cover for scam and fraud centers run by syndicates.
However, despite their best efforts, this entire situation is an endless cat-and-mouse game between them and cyber criminals. Right now, cyber criminals leverage the use of AI in order to perform sophisticated digital fraud tactics. Nevertheless, there is one important thing that the Philippines has to keep at heart, that cybercrime in general must be stopped once and for all.
