In March 2020, the world was shocked by the spread of the coronavirus or COVID-19 outbreak. Curfews and movement controls have been enforced; all business activities are temporarily suspended to stop the spread of the pandemic. The outbreak of COVID-19 not only impacted the entire world’s economy, which was not inadequately prepared for this pandemic but also affected the two most prominent economic powers, China and the United States.
The curfew and the closure of some industries from operating face-to-face activities, especially tourism, services, education, and business during the COVID-19 pandemic, have encouraged the development of the new norm, which is the transition from conventional to digital platforms. It is common to know that today, various activities can be carried out online and have become part of life among communities worldwide.
The use of online transactions as a means of payment is now widely accepted, and the number of businesses using them continues growing daily like a mushroom after rain. This results from the users spending more time at home than normal. This is one of the biggest threats to users and may have contributed to a rise in cybercrime cases. One of the most significant cybercrime issues is online scams or fraud.
Online Scams In Malaysia
According to a report from the Royal Malaysian Police (PDRM), between 2020 and May 2022, 68% of fraud cases involving RM5.2 billion were online scams. The Securities Commission Malaysia (SC) reported that there are still several high-profile cases of online scams, such as the iPay88 and AirAsia intrusions.
In addition, the country was also shocked by the leak of 22.5 million personal data of Malaysians through the myIDENTITI platform. These cyber scam activities became more prevalent as more payment services were offered online for users’ convenience. The more services offered online, the harder it will be for the authorities to monitor and monitor every transaction that is executed.
These online scams cases have hit record highs in the past two years since the COVID-19 pandemic hit the world. Coupled with the unstable economic situation, most companies suffered in sustaining their business during the Movement Control Order (MCO) period, which eventually forced them to shut down their business and lay off their employees or both.
The unemployment rate makes individuals more vulnerable, and they will tend to choose fraudulent online activities as an easy way to earn money to continue their daily lives.
How Online Scams Are Associated With The Economic Recession?
In a financial crisis, society will experience financial stress and look for opportunities to generate income, thus solving their financial problems. Among those most affected by the crisis are those with low incomes living in urban areas. Their life was sufficient enough. Plus, their monthly commitments, such as rent, car instalments, and others, will cause their lives to be squeezed.
The situation is worsening for couples with a child aged from two months to a year, as many expenses are required, draining a large portion of their income from purchasing diapers and baby milk. Child expenses also vary according to their age and level of growth. Expenses become increasingly demanding as the child grows older and vice versa.
Faced with all these kinds of commitments, parents do not have any savings for their children, let alone for themselves. Looking at these loopholes, scammers will take advantage of this situation by offering non-existent opportunities such as investment opportunities, job opportunities, or a government grant that promises lucrative results in a short period.
During the economic downturn, scammers create fake job-seeking websites and send soliciting emails promising high wages while working from home. But in reality, the work and opportunities offered do not exist but require a down payment in advance or sometimes an advance payment to “book or bid” for this job opportunity.
Due to monthly commitments and family responsibilities towards their spouses and children, the victims sometimes do not think long enough and lose their money to the scammer because they had to pay a down payment in advance to confirm they would get this job opportunity.
During this time, the spread of fraud, false and fake information will likely increase as scammers see this as a golden opportunity to take advantage of those struggling financially. Fraud schemes such as Ponzi, fake investment opportunities, and pyramid schemes will become more prevalent.
In these challenging circumstances, the affected group categories (urban poor) will act and become aggressive. Due to the rampant online scams, any attempt to distribute survey questionnaires via Whatsapp usually receives a low response rate.
Plus, any attempt to obtain information using Google Forms will be seen as something negative and a form of exploitation from the viewpoint of those already poor. (with the exception that their closest friends distribute the questionnaire survey form or they have been informed in advance of this)
In short, the world economy’s recession and online scams cases can be attributed in several ways. The economic downturn has exposed the public, especially those facing the financial crisis, get some exposure to various types of fraudulent schemes.
It is essential to remain vigilant and take security measures to protect yourself, your spouse, close family, and relatives from being exposed to online scams tactics, especially during this economic downturn.
*Malay Version of this article was published in Warta Oriental entitled “Penipuan Atas Talian Tidak Mengenal Masa Rehat: Senantiasa Kekal Bersiap-siaga Sewaktu Kemelesetan Ekonomi”. Retrieved from, https://wartaoriental.com/2023/03/20/penipuan-atas-talian-tidak-kenal-masa-rehat-kekal-siap-siaga-sewaktu-kemelesetan-ekonomi/
*This article does not reflect the stance and policies of the institutions involved. It is the author’s opinion, research, and experience while engaged in fieldwork.
About the Author
Renugah Rengasamy. Head of Information Technology (IT) Division at the Social Institute of Malaysia
Rashid Ating. Researcher at the Institute of Advanced Studies (IAS), University of Malaya (UM), Kuala Lumpur, Malaysia
More articles from Rashid Ating:
