Press Release
January 18, 2021

PRIVILEGE SPEECH
"Giving a Voice to Victims of Financial Fraud and Cybertheft"
January 18, 2021
Session Hall, Senate of the Philippines

Delivered by the Honorable Win Gatchalian, Senator of the 18th Congress:

Mr. President, I rise on a matter of personal and collective privilege, hoping to prevent others from having to experience the same hardships that I and many other Filipinos have suffered at the hands of scammers, fraudsters, and financial cyber-thieves targeting bank deposits and payment cards of innocent citizens.

My story begins on January 5, 2021, one of our first days back in the office after the holiday break. While we were hard at work here at the Senate, some nefarious individuals somewhere out there were also hard at work to rack up more than one million pesos worth of unauthorized transactions on my Unionbank credit card.

The fraud employed on my credit card was not high-tech by any means. It was a simple scam. What the criminals did was call Unionbank, the credit card issuer, and requested to have the cell phone number linked to my credit card changed. Thus, instead of the One Time Pin or OTP messages being sent to me on my cell phone, the OTPs were being sent to the phone number provided by the fraudsters. This allowed them to bypass the safety feature entirely and use my credit card without my knowledge. In the span of less than two hours, between the time I reported to the bank that suspicious activities were happening on my card and the time the bank cancelled my card, four transactions had already cleared on my card via FoodPanda. This allowed the criminals to make away with P1,076,880 worth of alcoholic beverages. As of today, the National Bureau of Investigation and other law enforcement agencies are still working to catch these cyberthieves.

When I reported what happened to me on social media, Mr. President, it attracted significant attention among netizens and journalists alike. This case also caught the attention of people who had experienced similar instances of fraud. Unexpectedly, over the two weeks since my credit card fraud incident my office has become a sort of unofficial financial consumer protection desk. Almost one hundred informal complaints have been received by my office so far about a wide range of financial cybercrimes legally subsumed under the term "access device fraud" -- including phishing, unauthorized transfers and withdrawals from deposit accounts, and payment card theft. I will share a few of their stories, using pseudonyms for their protection.

Albert* and his son Carlo* went to sleep on the evening of January 3 like any other night. By the time they had woken up the next day, however, cyber-thieves had completely changed their lives. It appears that just before midnight, cybercriminals began siphoning funds from various Metrobank accounts of their family-run business. Utilizing various fund transfer mechanisms and cardless ATM withdrawals, the thieves managed to steal P1.8 million from the various company accounts up until 5 A.M. Albert was shocked to discover 80 unread messages on his cell phone upon waking - all notifications from Metrobank confirming the various transactions carried out by the thieves. According to Albert and Carlo, the bank's fraud division has already told them that chances are slim they will be able to recover the missing funds.

Mistulang akyat-bahay gang ang bumiktima sa mag-ama pero ang mas masakit ay ang katotohanang nanakaw ang pera nila sa kamay ng pinagkakatiwalaang bangko na nangakong kaagapay sa pagpapalago ng perang galing sa dugo't pawis nila.

Financial cybercrimes are not limited to million-peso amounts. An unfortunate example of this is the story of Patricia*, who lost around P30,000 from unauthorized e-transfers from her Metrobank savings account to accounts of strangers in other banks. For Patricia, who is one of millions of Filipinos who lost their job because of the pandemic, that is a lot of money and a heartbreaking loss. Patricia told us that she and more than 270 other people have created a group chat because they all experienced similar losses from their respective accounts with the same bank. Patricia said that the bank has also informed them that it will be unable to return all of the money lost.

One group that is particularly reliant on digital banking is the OFW community. Unfortunately for Joy*, an OFW currently deployed to the Middle East, fraudulent digital banking charges found on her BDO savings account with a certain bank resulted in her losing more than P60,000. That is her life savings we're talking about. According to Joy, her bank said the fraudulent charges were not "valid for reimbursement", meaning her life savings is gone for good.

Again, these are only three out of almost one hundred stories shared to my office by distraught consumers over the past two weeks, not only with the banks named above but also with other household names such as BPI, Citibank, and HSBC. Despite the varying facts and circumstances of their cases, most of the people we spoke to said the same things: They want their money back. They no longer trust the banks that allowed their hard-earned money to be stolen. They hope the government can help them somehow.

Hindi ko lubos maisip kung ano ang naramdaman nila matapos malamang naglahong parang bula ang perang pinag-iingatan nila para sa kinabukasan ng kanilang mga pamilya. Hanggang ngayon, Ginoong Pangulo, wala silang nakikitang aksiyon mula sa mga bangko para mapanagot man lang ang mga kawatang namantala sa kanila kahit na may "paper trail" kung saang bangko at kaninong pontio pilato nailipat ang ipon nila.

Mr. President, additional data provided by the Bangko Sentral ng Pilipinas indicate that the growing trend of financial consumer complaints is not something that we can ignore. The BSP Consumer Empowerment Group reported that during the first three quarters of 2020, the number of valid complaints processed grew by more than 63%, from 9,250 in 2019 to more than 15,000 between January and September of 2020. The CEG also reported a year-on-year growth rate in consumer complaints specifically relating to e-banking and credit card complaints during the same period of 40% and 45.6%, respectively. Take note that the 2020 figures do not yet include the spend-heavy Christmas months.

It is not every day that a senator reports a million pesos worth of unauthorized transactions on his credit card. Unfortunately, Mr. President, the reports received by my office imply that the swift and deliberate action taken in investigating my financial consumer complaint is the exception, not the norm. It is evident that the desperate pleas of many of my fellow victims of access device fraud and financial cybercrimes have fallen upon deaf or uncaring ears.

Mr. President, it is our solemn duty as elected representatives of the people to give voice to their concerns and ensure that their grievances are acted upon. As such, this representation seeks the assistance of the appropriate Senate committees in conducting a formal inquiry in aid of legislation into the state of financial consumer protections in the Philippines, specifically regarding access device fraud and other cybercrimes involving theft from the bank accounts and unauthorized use of payment cards. If the banks want to avoid listening to the complaints of the consumers who have entrusted them with their life savings, then we will call them here to the Senate and make them to listen.

Very broadly, Mr. President, there are three main questions which I hope this Senate inquiry will answer.

The first: How can we improve financial consumer protection through enhanced regulatory processes? In general, the regulation of banks is within the ambit of the Bangko Sentral ng Pilipinas. The BSP's Manual of Regulation of Banks, however, takes a rather laissez-faire approach when it comes to financial consumer protection, with the respective Boards of the banks ultimately responsible for implementing consumer protection practices within their operations. This inquiry will be a good way to analyze and critique the current regulatory regime, with an eye towards also improving synergy and strengthening cooperation between the BSP, banks, and government agencies specializing in investigation, law enforcement, data privacy, and other applicable fields.

Second: How can we hold individual banks and the banking sector as a whole accountable to the highest standard of diligence? The fiduciary nature of banks necessitates they be held to a higher standard of diligence than most other commercial entities. Unfortunately, some of the cases brought to our attention make it clear that there are banks have that failed to meet this standard of diligence. This negligence has sometimes led to the loss of the hard-earned money of consumers. This is something that must be remedied.

Another cause for concern is that these failures have also led some of the fraud victims we spoke with to mistrust banks, refusing to deposit more money or even closing their accounts. Personally, I believe that a robust and secure banking system entrusted with high consumer confidence is critical to fostering inclusive growth as the Philippines economy transitions into a more financially mature regime. Payment cards and e-banking in general are also critical to facilitating contactless transactions during this unprecedented pandemic era. As such, ensuring that banks meet the high standard of consumer care required of them will be beneficial to the banks as well as consumers, because it will improve public confidence in the security of their physical and virtual vaults and safes.

Last, but most importantly: How can we help victims of financial fraud and cybertheft recover their hard-earned money? In all honesty, this is one question to which we cannot promise an answer. However, we will do all we can to find solutions. It is heartbreaking to note that most of the complaints filed with my office came from low income to lower middle-income constituents. They are not powerful people with million-peso credit limits and the media power to have their cases immediately acted upon. They are working-class Filipinos whose thousand-peso losses from savings accounts could very well drive them and their families below the poverty line. Low-income, working-class financial consumers deserve the highest priority for protection and restitution. It is my sincere hope that this Senate inquiry will allow the voices of working-class financial consumers to finally be heard, loud and clear, by those who need to hear them.

Paano pa natin mahihikayat ang mga tao na mag-impok sa bangko na naturingang mga institusyong nagsabing "you're in good hands" kung hindi naman pala nila kayang panindigan ang mga katagang ito? Sabi pa ng isa sa mga nangungunang bangko sa bansa, "we find ways". Sana nga ay maisagawa nila ito sa kanilang mga kliyente. "The future begins wth you" ika nga ng isa pang pinagkakatiwalaang bangko, pero mukhang sa puntong ito ay mukhang hindi kaaya-aya ang kinabukasang kinakaharap ng mga kawawang biktima.

Thank you, Mr. President. I respectfully yield the floor.

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