After pyramiding comes text scams

The National Telecommunications Commission (NTC) has hit the nail right on the head when it pointed a finger at mobile phone companies for being partly responsible for the current proliferation of text scams.

With more than 22 million potential victims, it seems that text scams are now spreading to the provinces where the perpetrators of SMS (short message service) fraud hope to lure more victims.

Apparently, pyramiding has now lost most of its attraction after the much-publicized case of con-queen Rosario Baladjay. Instead, text scam cons are shifting to a less profitable but more sustainable type of fraud, and looks like they are getting away with it.

The Anti-Money Laundering Council (AMLC) estimated that the text scam con artists pocketed at least P5 million last year, a measly amount compared to the billions that pyramid scams ran away with. Yet this could be just a small fraction of the actual stash, considering that the amount was just based on what was just reported.

Apart from those recorded by AMLC, the NTC has also noted a growing number of complaints on text scams last year and during the first quarter of this year. The trade department likewise logged more than 100 queries on the validity of the supposed text lotteries.

Text-Based Fraud Comes Easy

Sadly, all the NTC can do to stop the spread of fraud is to block the SIM (subscriber identification module) identification used in the reported fraud scheme. Last year, the commission blocked 387 SIM cards linked to text scams, while deactivating already 102 SIM cards during the first quarter of the year.

But, as you and I know, blocking SIM numbers hardly deters the criminal mind because one can easily purchase a new SIM for just P100.

Had telecom companies and the court not blocked a policy approved by the NTC in 2000, these text scams may not have spread quickly and easily. Part of the circular released by the commission was a provision requiring phone companies to keep a record of their prepaid subscribers by making sure that each SIM card is registered to a bonafide consumer with a verified address.

Telecom companies however took their case to the court, and found a sympathetic ear. Smart Communications and Globe Telecoms argued that registering prepaid SIM cards would involve added costs that would, of course, be passed on to consumers.

Were the telecoms really concerned about the added cost burden to text users? Or were they more anxious that the more stringent regulatory measures would negatively affect the vibrant and lucrative sales of SIM cards. The added cost of registering prepaid SIM cards could have been easily absorbed by cutting down some promo expenses.

Text-Based Fraud In Many Forms

During the last two years, the modus operandi has evolved to include some seemingly absurd proposals. Yet, with patience, text con artists are still able to persuade a number of victims to fall for the crap.

One of the most popular schemes is a text message congratulating the cell phone owner that he or she has won a substantial amount in a raffle sponsored by some prestigious agency like the Philippine Amusement and Gaming Corp. or the Philippine Charity Sweepstakes Office.

The text further tells the receiver to call a number to receive additional instructions on how to claim their prize. The person on the other end of the line would of course be a fraud pretending to be a ranking officer of the named office. The impersonator then enumerates to the victim to do certain steps – often too simple to be true –that would ensure the release of the prize money. A number of victims oblige, only to realize they had been set up.

Based on investigations by the AMLC, some "texting" scams involve automated teller machine (ATM) account numbers traced to terminated or resigned employees but still are active in the payroll accounts of the former employer.

Some even ask their stalked victims to send PIN codes of prepaid phone cards for a chance to win millions in the "raffle." Again, once the PIN is sent, the hapless victim is told to deposit a 10-percent equivalent of the raffle prize before claiming the big bucks.

The scam, according to AMLC, had mutated to elude apprehension. In some cases, a victim is asked to give his account number and other victims are told to deposit the 10-percent tax to this account number. This strategy is brilliant because it convinces an intended victim that indeed, he or she has won in a raffle because money is flowing in, unknowingly from other victims. In the event of an investigation, the account number could be traced to one who was also victimized.

Being Wary Of Text-Based Freebies

The NTC has been effectively barred by the court decision to mount an effective investigation to track down the perpetrators of text scams. At the moment, it is bent on bringing its case before Congress. But until that law is passed, public information continues to be the regulator’s best bet.

The inter-agency task force against text scams composed of the NTC, the AMLC, the Department of Trade and Industry, the National Bureau of Investigation and the Philippine National Police are warning the public to be wary of text-based promotions coming from an 11-digit cellular phone number. Legitimate SMS raffles are given a three- or four-digit code approved by the NTC. Also, if the sender asks for money or any asset in exchange for bringing home a prize money, for heaven’s sake don’t.

While the task force had not come up with a secretariat, complaints against text scams could be lodged at DTI (8977384), NTC (text 682 or call 9267722), and AMLC (5367358).

Impending Water Crisis On TV

"Isyung Kalakalan at Iba Pa" on IBC News (4:30 p.m. and 10:30 p.m., Monday to Friday) starts today a discussion on the impending water crisis we are facing. While certain parts of the country, particularly in the south, are still having intermittent rain, the volume of rainfall in Luzon is expected to be below normal levels during the ongoing summer period. Hence, water level at Angat Dam, the major source of water for Metro Manila and other parts of central Luzon, is projected to hit critical level unless typhoons start coming in earlier. Watch it.

‘Breaking Barriers’with Philhealth President Dr. Francisco Duque III

"Breaking Barriers" on IBC (11 p.m. every Wednesday) will feature the controversial Dr. Francisco Duque III, president of PhilHealth, on Wednesday, 28th April 2004.

Responding to allegations that the distribution of free health cards bearing the picture of GMA, and other local politicians, is merely cheap political gimmickry, Phil Health declared that as of now millions of indigent families are covered with health insurance compared to just thousands during the previous administration. Thus, according to Phil Health it was a "win-win" situation. The politicians earned the points and the poor families get free health insurance coverage. But will Phil Health and the existing government health facilities be able to deliver as promised to these millions of expecting beneficiaries? Watch it.

Should you wish to share any insights, write me at Link Edge, 4th Floor, 156 Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. If you wish to view the previous columns, you may visit my website at http://bizlinks.linkedge.biz.