Assessing the Adequacy of Malaysian Law in Preventing Online Scams: A Comparison with the United Kingdom

Abstract

The issue of Authorised Push Payment (APP) frauds is becoming increasingly prominent in digital banking as they cause substantial harm to society and finances due to manipulation of consumers to make voluntary payments to fraudsters’ accounts. Therefore, this issue has brought to light the problems of protecting consumer rights and ensuring proper regulation of the existing frameworks that determine liability distribution between banks and consumers. The main problem in the current study is associated with the lack of the statutory obligation for banks to reimburse losses from such crimes in Malaysia despite the rising level of criminal activity and consumers’ susceptibility in the field of digital payments. Protection of consumers under the current legal framework in Malaysia is mainly ensured by the Financial Services Act 2013 and banking regulations as well as financial dispute resolution services; however, no mandatory obligation on banks to reimburse losses related to authorised payments has been introduced. The research has used a doctrinal comparative legal approach as the methodology to review Malaysia's legislative and regulatory frameworks in relation to those applied in the United Kingdom concerning mandatory reimbursement of APP fraud victims. The research is based on legal sources including both Malaysian and comparative ones. The study concludes that the introduction of a mandatory reimbursement framework in Malaysia, informed by comparative analysis of the United Kingdom model, would strengthen consumer protection and improve the allocation of financial risk in APP fraud cases.