A “worrying increase” in fraud and cases of online scam has been observed in 2021, the Office of the Arbiter of Financial Services has warned.

“During the reporting year, we have come across a range of consumers who fell for some sophisticated fraudulent schemes, in the process leaving them powerless and nursing financial losses, sometimes of big amounts.”

Such scams varied from fraudulent websites promising unrealistic profits through crypto currencies and mobile text messages in which victims were either conned to make deposits or disclose their credit card details. The warning was sounded in the 2021 annual report.

“One consumer, a Maltese, was particularly impressed that he found a ‘crypto expert’ who was chatting with him in Maltese only to realise – at a much later stage – that the fraudster was using an instant online translation service whilst chatting.”

Moreover, some users exposed themselves to huge risks by allowing these scammers access to their PCs via desktop applications.

The Office remarked that these cases reinforced the need for stepping up educational campaigns to raise awareness on such scams, especially to be on the lookout when befriending individuals claiming expertise or experience in crypto assets. The illusion of reality is often to blame for the many scams that consumers fall prey to, the Office said.

Some of those who fell prey to these scammers reported sending money to websites belonging to firms which purported to be licensed Malta Financial Services Authority. To the untrained eye, these fraudulent websites seemed genuine and authentic through the use of graphics, logos and livery of reputed organisations.

Another means used to siphon funds fraudulently, was through an ‘urgent’ SMS that appeared to be a genuine message from a bone fide company. More often than not, the user would be prompted to follow a link to a fake website which however looked identical to the real-life company or service provider. Eventually, customers would be asked use their card to pay for small amounts, but at the same time compromising access to their savings or debit cards. This would result in multiple transactions from their accounts within minutes.

The office pointed out that the widespread use of smart phone usage has accentuated the problem as it has speed up the immediacy by which users reply to messages. This makes such fraud attempts harder to detect.

Unfortunately, in some cases, victims can only report the matter to their respective enforcement authorities, who are better placed to investigate such matters, the Office said.

Though card payments may, in some instances, be refunded following a chargeback process, the return of all funds withdrawn may not always be successful. The same can be said when sending funds via the banking system.

The Office warned that sending a bank transfer is not a guarantee that the service or product being paid for will be delivered, and that the remitting bank would have access to details of the beneficiary account to which funds were sent, even if such account would be held with another bank elsewhere.

Probably the true extent of such fraud may never come to light as some of the victims, especially those would have been swindled huge sums would not feel comfortable to come forward to report the case.  While educational campaigns were a crucial weapon to safeguard against such crimes, fraudsters strive to remain a step ahead.  Hence financial and other stakeholders should engage better to raise awareness and employ measures – as far as reasonably possible – to influence consumer behaviour and alert users not to react impulsively and risk falling into such traps.