CAP: Subtle dangers lurk behind online transactions

Malaysia is one of the fastest-growing online markets in the ASEAN region. Malaysians use the internet extensively for news, research, social networking and online shopping. With 19 million people online we have the highest penetration of online shoppers supporting a RM25 billion business which is poised to double by the year 2020. However, are all online shoppers prepared to swim in an ocean infested with sharks?

Ecommerce is on the rise owing to several advantages such as the convenience of shopping online, price advantages, exclusive deals and availability of reviews. Booking of airline tickets, hotel rooms, cinema tickets, payment for utility bills, transaction with government agencies and banking have all gone online. Consumers making transactions with such sites or popular online shopping sites seldom face any issues, provided they follow proper procedures and don’t get conned by phishing sites.

Issues mostly arise when consumers purchase items through social media sites. These sites are run by small companies or individuals who do not provide adequate security features and secure payment methods. That is also where unscrupulous parties prey on unsuspecting consumers and get away unpunished.

According to Digital News Report 2017, Malaysians were found to be the world’s largest users of WhatsApp at 51 per cent. Facebook and YouTube are also popular at 58 per cent and 26 per cent users respectively, WeChat and Instagram, with 13 per cent. With these statistics it can be quite scary how many consumers are potentially in danger of being taken for a ride.

Consumers’ Association of Penang (CAP) has received about 50 complaints over the last one year on a variety of online scams. This is only the tip of the iceberg as the actual number is believed to be much bigger since many of the complainants were reluctant to pursue the matter further when told of the procedures to recover the amount. Often the expenses incurred were more than the claims they were seeking.

In one unique case brought to the attention of CAP, the complainant had failed to qualify for a bank loan. He had been observed by a man claiming to be a loan agent who offered to get him a loan easily and speedily. The complainant gave his bank debit card and other personal details to the agent.

From his bank statement he noticed that his account which was at minimum level suddenly became very active with transactions going in and out. Then he was arrested by police in connection with several police reports made against him, but he could not understand why.

Later he found out that his agent had advertised brand new scooters for sale at RM1,000 each on Facebook. The buyers were required to deposit the RM1,000 into this particular bank account. An estimated 200 people deposited their money into the account and waited for their scooters which were never delivered. Meanwhile the agent disappeared.

According to media reports one week ago, the Kuala Lumpur Commercial Crime Investigation Department chief ACP Mohd Luthfi reported that there were139 cases of bogus online loans in Kuala Lumpur last year amounting to RM3.7 million.

ACP Mohd Luthfi explained that the victims were normally people suffering from cash flow problems who needed money urgently. They were tempted by advertisements on social media with attractive terms such as low interest rate; no guarantor or collateral requirement; immediate approval; hassle-free applications for even those blacklisted by banks being qualified. The scammers disappeared with the loan processing fees. As the fees was usually quite small the victims didn’t lodge any report and that encouraged the scammers to continue their fraudulent practice.

Even more scary were cyber attacks that were launched in the Asia Pacific region in recent years affecting large populations. The countries affected did not disclose any statistics. In Malaysia, a number of Automated Teller Machines (ATMs) have been affected by overseas hackers and this was understood to have been owing to outdated Operating Systems in ATMs.

Scammers are becoming smarter by the day as technology evolves and they keep changing their modus operandi. Therefore, consumers making transactions should be discreet and keep themselves updated on the activities of the underworld in cyber space. When in public places avoid making online transactions. Also be wary of scanning Quick Response (QR) codes in public places, as criminals paste their own QR codes over the original ones. Also avoid get rich schemes.

In conjunction with World Consumer Rights Day themed, “Making Digital Marketplaces Fairer” on 15 March 2018, CAP urges the authorities to keep publishing latest updates on how to beat cyber crime and the statistics of cyber crimes. The authorities should track down the criminals and mete out the maximum penalty to discourage others from jumping into the bandwagon. Banks should update Operating Systems in ATMs frequently.

Letter to Editor, 14 March 2018

GOVERNMENT MUST MAKE PERSONAL INFORMATION DATABASES SAFE

The Consumers’ Association of Penang (CAP) is shocked that our personal information databases are unsafe, seen from the barrage of news concerning “personal data theft” and “illegal sales of personal data” these last few weeks. We are concerned whether our country is prepared for the digital economy.

The majority of our transactions today are done online. The push towards the digital economy comes in many different forms – businesses give special discounts for online purchases, banks penalise those who use counter services and government agencies, such as EPF and SOCSO, are making it mandatory for contributions to be deposited online. Even income-tax filing is going online.

All this leads to our personal data being stored in digital databases online and offline.

The lack of proper cyber security has caused personal data to be stolen and sold for criminal and commercial purposes. For example, the shocking illegal sale of personal data from 46.2 million registered phone numbers has been dubbed the largest data breach in Malaysian history.

It does not matter that the database is three years old. There are still people who have the same phone and many of us still have the same phone number, home address, etc from 2014. Not to mention a person’s MyKad number is for life.

Stolen personal data can be used to scam the data owner or others. It has become a commodity that is sold in shady kinds of transactions.

Considering the gravity of the situation, it is not right for people to have an attitude of, as long as there is a market for it (personal data / information), there will be data breaches. The whole point of cyber security is to keep hackers, people who would steal what is not theirs and sell for their own profit, out of these massive databases of personal information.

The authorities have to always be ten steps ahead of these hackers to prevent the inevitable hacking attempts. But are they on top of things?

In February of this year it was reported in the press that the personal health data of tens of thousands of patients from both private and government hospitals were stolen by hackers. CAP had written to the authorities to ask how they plan to handle the incident. The reply we received stated that no such incident had occurred and that and all our cyber security measures were in place.

If what they claim is true, why do these personal data breaches keep happening?

Whenever someone questions the whole business of “going online”, the answer is that it must be done to keep up with developed countries. While it is true we do not want to be left behind, have we perhaps jumped the gun in this case?

Does Malaysia have the right and effective cyber security measure in place? Do the authorities employ white hat hackers to look for weaknesses in cyber security, etc? It is not enough to be tech savvy or IT trained.

To conclude, the attacks on our privacy and safety via personal data theft has gotten out of hand. Seeing as Malaysia is already deep into the “being online” scene, CAP asks the authorities to:-

– Track and trace the hackers, companies and others who sell and buy stolen personal data and punish them accordingly.

–  Check to ensure that all bodies using digital transactions have the necessary and latest security measures in place. Especially banks, government department, hospitals, etc.

– Make updates mandatory so that companies will have the best online security measures.

– Have CyberSecurity Malaysia certify, check and monitor the cyber security measures taken by all bodies using online transactions and keeping massive databases of personal information.

Letter to the Editor, 20 November 2017

HOUSE OWNERS AND TENANTS NEED LEGISLATIVE PROTECTION IN RENTAL HOUSING

The Consumers’ Association of Penang (CAP) has over the past decades been advocating rental housing as the most logical move to embrace but apparently both the government and the developers have been promoting house ownership instead.

Khazanah Research Institute managing director Datuk Charon Mokhzani stated that rental housing schemes such as the People’s Housing Programme is the way forward. He cautioned that the government should ensure an efficient use of resources, be wary of exhausting resources for the sake of encouraging home ownership as there are other alternatives such as renting and rent-to-own schemes.

This view was also shared by the National House Buyers Association secretary-general Chang Kim Loong who said that those who have limited income to buy houses should consider renting to avoid being saddled with a 30-year loan and risk foreclosure if the person cannot meet the monthly payments. He also said that home ownership reduces the mobility of the owner in cases when the person needs to move outstation or a new location of work.

 

A survey conducted by the Penang State Government early this year showed that more than 90 per cent of the respondents aged between 18 and 29 found it difficult to purchase property in Penang. About the same percentage of them perceived property prices being considerably expensive.

While more than 90 per cent of the respondents hoped to own property, only half of them think that owning a property is possible.

A serious setback is holding up home ownership according to the Penang State government. Many of the 20,887 units of affordable housing built in the state between 2008 and 2016 were still vacant despite having many applicants for these low-cost and low-medium cost houses and flats.

One of the reasons given during a public talk at the Penang Institute in May was because the strict Bank Negara guidelines that disqualified about 70 per cent of the housing loan applicants. Despite the practice of government-subsidised housing, applicants for these units are still not qualified for housing loan.

House ownership is expensive. As an example, a RM350,000.00 unfurnished home would cost RM658,280 after paying the bank for 35 years at 4.35 per cent interest rate together and a RM35,000 (10 per cent downpayment). Other inherent expenditures such as the agent’s fee, legal fees, and the Mortgage Reducing Term Assurance would cost another RM14,039. Thus, to own an apartment unit, you eventually have to pay more than RM672,319 for a 700 sq ft space called home.

For the same unfurnished apartment unit that you rent, basing on the current market rental value of the home of RM800 per month, you only have to pay RM336,000 for 35 years. This amounts to only half the price of the apartment!

However, rental housing will not work if proper legislation is not put into place to protect both the landlord and the tenant.

Currently, there is no dedicated Tenancy Act and the legal framework on tenancies is pro-tenant in practice. A tenancy agreement is governed by several Acts of the law such as the Contracts Act 1950, the Specific Relief Act 1950, the Distress Act 1951, the Civil Law Act 1956, the National Land Code 1965, and the Common Law/Case Law.

In such a situation, we urgently need a dedicated legislation such as a Tenancy Act to protect both the landlord and the tenant, providing an affordable avenue to seek redress if disputes arise.

A tenant needs an assurance that the landlord does not arbitrarily raise the rental or evict the tenant. On the other hand, the landlord may have a tenant who flouted the tenancy agreement.

The government has to address these problems, perhaps by drafting out a standard contract that can be used by those who want to rent their residential property. Such a document can be downloaded from a website for free.

CAP proposes the establishment of a Tenancy Tribunal to resolve disputes between the landlord and the tenant. For example, if a tenant is found guilty of wilfully damaging the rented property, he can be blacklisted in a system similar to the Central Credit Reference Information System (CCRIS). Such list will allow both a landlord to check on a potential tenant, and vice versa.

Tenancy Tribunal is nothing new because New Zealand has it and New South Wales, Australia, has the Consumer, Trader and Tenancy Tribunal.

With rental housing fraught with uncertainties, people are reluctant to rent a home. The government should seriously consider a legislation to address rental housing problems and a Tenancy Tribunal to handle disputes between landlords and tenants. But first, a standard contract that can be used or referred to by either party would be helpful. This will give confidence to house owners and potential tenants in embracing the rental housing culture.

Letter To The Editor, 24 July 2017

NO FAULT LIABILITY: LET THE PEOPLE DECIDE

The Consumers’ Association of Penang (CAP) strongly believes that consumers will benefit from the NFL just as employees benefit from the Social Security Organisation (SOCSO) which operates on the principle of NFL. If SOCSO has been overwhelming successful for more than four decades why can’t NFL.

CAP disagrees with former Bar Council chairman Kuthubul Zaman Bukhari’s statement that “any move to introduce the No Fault Liability (NFL) scheme will result in motorists having to pay a higher insurance premium”. His assertion is baseless.

Under the current system about 30 per cent of the premium goes to the insurance agents’ commissions and management expenses. If lawyers’ fees are deducted then the victim will receive less than 50 per cent.

A NLF scheme on the other hand does not charge commissions and there are no lawyers’ fees to be paid. Moreover, the NFL administrative expenses would be less than 10 per cent of the amount collected as can be seen from SOCSO’s audited account. Thus 90 per cent of the amount is available to compensate and rehabilitate victims and to provide them with other benefits. Therefore, on the contrary to what Kuthubul claimed, the premium of NFL should be lower.

The Actuarial Society of Malaysia had pointed out that it expected the detariffication of the current fault-based system motor vehicle insurance to cause the premium to increase. It had explained that “upon de-tariffing of the tariff and Motor businesses, the premium rates are expected to go up for Motor businesses which would result in an improvement of the motor loss ratio from the current loss making or break even position”.

The operational cost of NFL would be minimal, essentially eliminating lawyers and touts from the current fault-based system. Moreover, the fault-based system often take years for victims to be compensated as a result of the long and tedious court process. In the meantime, the victim will be burdened with medical and hospitalisation fees besides having other miscellaneous expenditures which can be substantial.

Once the compensation is paid, the lawyers will charge contingency fees amounting to between 20 and 30 per cent of the award. After whatever amount remains is used to cover medical/hospitalisation bills or funeral expenses (if the victim had died), leaving a paltry sum or nothing at all is left for the family. If the victim needs long-term medical treatment/rehabilitation or if he is permanently disabled, then the victim’s family might be driven into debt or financial despair.

In a 2016 report it revealed that touts would lure a relative of an accident victim by ‘giving’ about RM1,000 for expenses then requesting the victim or the next-of-kin to sign documents to commit the case to a legal firm that the touts represent. Once the compensation is obtained, the tout would impose a ‘service charge’ as high as 25 per cent of the amount besides claiming disbursements that he had spent on the case. He may eventually get as much as 40 per cent of the entire insurance claim.

NFL on the contrary ensures that motor accident victims are taken care of financially and receive medical treatment (if need be, for the rest of his life in cases of permanent disability) without having to wait for the outcome of expensive and tedious legal procedures.

NFL is an obvious threat to lawyers as an accident victim does not need them to prove that he is innocent in court to receive compensation for his medical bills.

We are of the opinion that the financial needs of the injured and the dependents of the deceased is of greater importance and has to be addressed soonest possible without having to wait for the outcome of the legal process. Prosecuting and punishing the motorist responsible for the accident can be done under the law governing traffic accidents.

Why did Bank Negara Malaysia (BNM) not recommend the introduction of the NFL scheme to the government instead of detariffication which would only serve to increase the profits of the insurance companies while leaving the exploitation of accident victims untouched?

Letter to the Editor, 6 July 2017

BNM MADE A U-TURN ON NO FAULT LIABILITY SCHEME

Do consumers have to pay more for their motor insurance than what they are paying now when detariffication of motor insurance starts on 1 July?  At least this is what the Consumers’ Association of Penang (CAP) understands because the General Insurance Association of Malaysia (PIAM)’s reply to its FAQ question “What % increase can I expect (CAP’s emphasis) on my motor premium” is:

“It will differ from insurer to insurer. Consumers should shop around for the motor insurance that meets their needs.”

A report quoting the Actuarial Society of Malaysia also concurred that “upon de-tariffing of the tariff and Motor businesses, the premium rates are expected to go up for Motor businesses which would result in an improvement of the motor loss ratio from the current loss making or breakeven position.”

 

Detariffication will inadvertently penalise good drivers by a plethora of factors, particularly their gender, their age, car mileage, and the occupation of the driver.

Instead of detariffication, Bank Negara Malaysia (BNM) should introduce the No Fault Liability (NFL) Scheme which will certainly benefit consumers without burdening them financially yet addressing their problems with current motor insurance scheme.

In fact BNM had identified a list of problems that consumers faced as early 2007 and they included:

·         Inadequate access to third party insurance cover, particularly for old and commercial vehicles.

·         Lengthy claims settlement process.

·         Premiums which have not been revised since 1978.

·         Insurers were reluctant to offer third party insurance cover as premiums are insufficient.

·         Risk of accident victims not receiving adequate or any compensation.

The current fault-based system is based on the principle of Corrective Justice which means that you have to pay if you are at fault. Under this system, not every person injured in a Motor Vehicle Accident (MVA) receives compensation. Moreover, the claimants have to wait a considerable length of time and spend substantial amounts of money before the final determination of their rights and award of compensation, besides having to encounter other problems.

In 2010, the Consumers’ Association of Penang (CAP) then proposed a No Fault Liability (NFL) Scheme to BNM. In fact, the introduction of this NFL scheme in relation to bodily injury and death resulted from MVAs was proposed by the late Tan Sri Dato’ Harun Hashim.

The advantage is that NFL would cost only a fraction of most of the motor insurance policies; Tan Sri Dato’ Harun Hashim proposed an average flat rate of RM50 in 1995 and CAP concurred with him on that rate.

In August 2007, the Attorney General’s Chambers had in fact issued a Preliminary Issue Paper proposing that a No Fault Liability (NFL) Scheme be introduced.

Subsequently CAP submitted a memorandum that NFL be guided by the following principles:

·         Adequate, efficient and quick compensation for victims of MVAs without the need for litigation or dispute resolution on the issue of fault;

·         Rehabilitation and life-long care for victims with serious injuries and support for dependents of deceased victims;

·         Effective accident prevention strategies; and

·         Low administrative costs so that more funds are available for road accident victims.

NFL is nothing new and CAP proposed that Malaysia can emulate the model practiced in Victoria, Australia, and run by the Transport Accident Commission (TAC). NFL has been adopted in the USA, Canada, and Australia.

We have also successfully implemented the Social Security Organisation (SOCSO) scheme since 1971 which is a NFL scheme. This shows that we have the expertise to design and implement such a scheme.

In Malaysia, CAP suggested that the scheme could be funded by the existing insurance third party premiums. CAP reasoned that the legal and administrative fees of insurance companies were expected to be reduced as there is no longer a need to prove fault, and there will no longer be any commissions to agents and the existing premiums may suffice.

Moreover, funding may also be derived from the Social Security Organisation (SOCSO) as it also deals with claims by workers who are injured in the course of their employment, including travelling to and from their work place.

One common concern is accident prevention to make the scheme viable on long-term. As in the case of Victoria, there was a reduction of more than 38,000 claims over a 10-year period, resulting in a saving of more than AUD$ 1 billion. The number of fatalities plunged to 377 in 2006 from 776 in 1987.

The Australian government took pro-active steps to improve road conditions, vehicle safety and hard-hitting and emotive road safety campaigns.

In fact BNM had interest to implement NFL until 2010 when BNM announced the Basic Motor Cover Framework (BMCF) which dealt a knell for the NFL. Then in late April 2017, BNM announced it was liberalising the motor insurance industry so that individual insurers and takaful operators can determine the pricing of motor insurance products.

When the detariffication of motor insurance starts on 1 July, it is going to affect all Malaysians who owns a vehicle. According to the Malaysian Institute of Road Safety Research (MIROS), there were 27.61 million registered vehicles in the country in 2016. The impact of detariffication has on every person who owns a vehicle license is unimaginable.

There had been a general consensus between CAP, BNM and the Attorney General’s Chamber that NFL was good in terms of remedies for accident victims. With the detariffication, it is not going to have significant improvement on the problems that BNM had identified in 2007.

Are the consumers’ problems identified by BNM in 2007 been comprehensively addressed or is BNM merely protecting the interests of the insurance industry when motor insurance is detariffed? CAP reiterates that the NFL should immediately be adopted and implemented for the greater interests of consumers. It is surprising that BNM is persistent in supporting the strong insurance companies but not the people.

Letter to the Editor, 28  June 2017