Text scams thrive on cell phones’ popularity

By JOEL D. PINAROC, The Manila Times Subeditor

"CONGRATULATIONS! D’LST 7DIGITS of ur sim# had WON ELECTRONIC JACKPOT PRIZE fr, PAGCOR PHIL & CENTRAL BANK DTI #2588 2005 call KATE MuñOZ #09168880466."

This is but one of the text, or simple messaging service (SMS), scams circulating among the 30 million mobile-phone users in the country.

The One-Stop Public Assistance Office (OSPAC), a subagency of the National Telecommunications Commission (NTC), reports that victims of these bogus messages are not necessarily indigent folk, but include doctors, lawyers and other professionals.

Danilo Cuenca, OSPAC chief, said one documented case involves a lawyer who was duped into buying 12 prepaid cards in 300-peso denomination and dumping these into one number being used by the scammer.

"If the scam involves cash, the scammer often asks for prepaid cards.

If it involves prizes in kind, say a car, victims are often instructed to open an account or deposit certain sums to an ATM account to be able to ‘claim’ the prize," Cuenca said. He cited another case involving a private employee who deposited P15,000 to claim "prizes" supposedly won from an electronic raffle.

Unfortunately, the National Telecommunications Commission cannot pursue these cases and can only recommend "blocking" the number used in the hoax. Blocking makes the subscriber identification module, or SIM, card no longer usable.

Scams through text messaging continue to victimize mobile-phone subscribers despite efforts of carriers and government regulators to curb the crime.

Current estimates place the number of mobile-phone subscribers at more than 30 million, many of whom are subscribers to market rivals Smart Communications and Globe Telecommunications.

Sun Cellular, a relative newcomer to the mobile-phone business, is also enjoying brisk sales, and has logged more than 1.5 million subscribers.

Analysts project that the growth in the number of subscribers could also eclipse earlier forecasts of 20 percent, to reach more than 30 percent this year.

The density is notable in a population of roughly 82 million, indicating that mobile phones continue to outpace the rollout of land-line telephones.

Text exchanges between the more than 30 million subscribers, 90 percent of whom are on a prepaid scheme, also mean big business for carriers. These daily exchanges of text messages continue to generate billions of pesos in revenues.

However, with the significant increase in mobile-phone users, the number of consumer complaints against text scams is also on the rise.

An estimate from the Antimoney Laundering Council said scammers have pocketed more than P5 million from text scams in 2003. The figure is expected to increase in 2004 and 2005 once reports are verified.

Text scammers are also relatively hard to pursue, because they can easily switch from one number to another or can use multiple numbers to initiate the scam.

New scams

The NTC, the government agency that regulates the telecommunications industry, is processing around 30 confirmed cases under the OSPAC.

The OSPAC chief, Cuenca, said it is difficult to give an estimate because thousands of cases remain unreported. Victims are also reluctant to come forward and those who do have requested confidentiality clauses in filing scam cases with the OSPAC.

Edgar Cabarios, director of the NTC’s Common Carrier Department, added that scammers often name-drop or cite government agencies, like the Bangko Sentral ng Pilipinas, the Philippine Charity Sweepstakes, and the Philippine Amusement and Gaming Corp. to make the text messages more believable.

Ramon Isberto, public relations head of Smart, said scammers often use "psychological" ploys to lure unsuspecting consumers.

"A scam usually involves winning in a raffle draw or lottery. The ‘winner’ is informed that he or she can claim the prize from, say, the Philippine Charity Sweepstakes, supposedly to persuade the winner to disclose personal data," Isberto said.

"This is the most common scam being reported to us," he said.

‘Hazy’ rules

Rules on how regulators and carriers should go after text scammers, however, remain hazy.

Isberto said Smart cannot act on consumer complaints and can only report cases to the NTC.

"Sometimes the police are needed in cases of fraud through text messaging," Isberto said, adding that carriers have no legal authority to track suspected scammers.

The NTC’s Cabarios said, however, that carriers could take action on scam reports, particularly on the monitoring side.

He admitted, however, "it would be difficult to track down and monitor these scammers, because they usually use multiple numbers and are on prepaid arrangements. It would also be costly for the carriers."

Text scams fall under the crime of swindling and estafa; thus rules on how carriers and regulators should act on these cases remain unclear.

Bank secrecy laws also forbid agencies to open bank accounts that are used in scams.

Going after the scammers

But the NTC has put in place several measures to combat text scams.

The OSPAC’s Cuenca said the NTC will soon sign an agreement with the Department of Trade and Industry, the Bangko Sentral ng Pilipinas and the Antimoney Laundering Council, among others, to create for an interagency task force that would look into text messaging scams.

"The agreement will be signed before the end of the second quarter," Cuenca said.

The NCT has also filed a proposal in Congress to make text scam a "special crime."

Cabarios said the NTC expects to control text scams more effectively through a proposed special four-digit number to be assigned to carriers.

He said the NTC will hand down the memorandum on this "anytime soon."

The proposal requires carriers to direct all promos, and raffles to the four-digit number to help consumers indicate which promos are legitimate and which are scams.

Mother of all scams?

The consumer group TxtPower meanwhile says that the bigger issue is "push" marketing that the carriers themselves initiated.

Push marketing contains promos, invitations and gimmicks that subscribers have not asked.

Anthony Ian Cruz, convener of the group, said push marketing allows carriers to send out "unwanted" text messages to subscribers, without giving them enough information about their contents.

"The carriers usually send this promo inviting subscribers to reply or to register to avail themselves of the promo. What most subscribers don’t know is that they are being charged for merely replying via text messaging," Cruz said.

Although subscribers can easily ignore push marketing, he said carriers may have been violating privacy laws, because of the "abuse" of personal data from subscribers.

"Some carriers ignore the intended use of this private information. They sometimes use this information for other purposes, including sending out spams, or unwanted messages, through SMS," Cruz said.

He believes the money churned out by carriers from push marketing could reach astronomical sums.

He said a mere one percent of the more than 30 million subscribers unwittingly replying to these promos could mean that carriers can easily churn out millions of pesos daily.

The NTC apparently heeded the group’s calls last week when it issued a circular ordering carriers and content providers, which are firms directly engaged in sending promotional materials through text messages, not to send unsolicited push information.

The order, posted on the NTC website, said carriers could send promotional materials provided they get "explicit permission" from subscribers.

The memo also ordered carriers to stop sending materials once a subscriber does not reply to these messages.

It also required simple messaging services to display senders’ identity including addresses and numbers where subscribers can send requests to stop the spamming.

Carriers were also ordered to act on consumer complaints 30 days after receiving spam-related cases. The new rules will apply to both simple messaging service and multimedia messaging service, the NTC said.