‘Online platforms should be liable if they fail to prevent fraud’ (Poll Inside)

PETALING JAYA: Online platforms, including social media and messaging services, should be made financially liable if they fail to screen anonymous users who then use their platforms to scam others, says an expert.

Malaysian Communications and Multimedia Commission (MCMC) member Derek Fernandez said this is because anonymity is a critical factor in online scams as perpetrators often use false identities, masked IP addresses or fake profiles to avoid being identified.

“The bottom line is they do it because they know that you are unable to identify who they are, and therefore there must be a radical change in approach to ensure that anyone who accesses a network facility must be able to be identified whenever they are online, more so when a crime has been committed.

“This will enable the victim to take legal action in addition to the government prosecuting them under the law,” said Fernandez recently at a meeting of online network regulators in Thailand.

Governments must make it law that anyone who communicates with others on these platforms must disclose their identity and that the service providers must be able to reasonably authenticate those identities.

If a service provider cannot confirm the identity with reasonable diligence, they must be held financially liable and should compensate any victim of fraud and be liable for penalties, he said.

These are among the proposed measures to counter the pervasive use of OTT (over-the-top) platforms in online scams, as current laws are inadequate, he added.

Fernandez presented these measures in a paper “New Regulatory Challenges from OTT and AI – A Question of Digital Sovereignty”.

The paper was presented at the Regulatory Network Meeting 2023 in Phuket, Thailand, from Dec 6 to 8.

Currently, the MCMC categorises six types of OTT platforms:

Audio OTT such as Spotify and Apple Music; Video OTT such as Netflix and Amazon Prime; Media OTT such as TikTok, Facebook and Instagram; Messaging OTT such as WhatsApp and Telegram; Commerce OTT such as Shopee and Lazada; and Gaming OTT such as Mobile Legend.

Another measure is to ensure that those who access and use any network facility be registered with a strong proof of identity, while the service provider must be legally responsible for ensuring that this is done.

“For example, registration of SIM cards or OTT platform services must be improved with sufficient documentation to prove identity, of which the legal liability is strictly on the service provider,” said Fernandez.

“All service providers, including ecommerce platforms, must also adopt a strict ‘know your customer’ policy.”

These platforms must be liable to compensate victims of fraud if they are duped by an anonymous seller who was able to remain anonymous because the platform failed to establish strong identity verification procedures, he added.

Another measure to deal with scams in these online spaces, whether they create and host content or AI (artificial intelligence), is for platforms to be registered, licensed and subject to local laws.

Such licences must include specific clauses to protect data while all OTT platform terms and conditions must comply with national laws, and these rules must prevail over all others, he said.

Lastly, fines and penalties against platform operators for serious breaches of the above rules must be enforced globally.

“The MCMC uses a combination of Sections 211, 233, 244 and 263 of the Communications and Multimedia Act 1998 to try to regulate OTT platforms, together with stakeholder engagement with these platforms.

“However, this has not always yielded the optimal level of regulation,” said Fernandez, adding that there is a need to strictly regulate both the use of OTT platforms and the use of AI to protect nations against cybersecurity breaches and society from online threats.

According to the MCMC, 2.4 billion suspicious calls were blocked from 2018 to August 2023.