Banks in Singapore - Do They Reimburse Losses from Scams and Fraud?

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Banks in Singapore - Do They Reimburse Losses from Scams and Fraud?

In recent years, Singapore has experienced an increase in the number of scams, with vulnerable populations such as the elderly being particularly targeted. Over $470 million was lost to fraudsters in 2022 alone, a 65% increase over 2021 (Today Online, 2023). This growing scam problem has increased public scrutiny of banks and their liability policies when clients fall victim to frauds and scams.

This growing scam problem has increased public scrutiny of banks and their liability policies when clients fall victim to frauds and scams. Banks have been pressed to do more to protect customers, with MP Sylvia Lim stating, "While banks are not legally obliged to make good the losses of scam victims, there is a legitimate expectation for banks to adopt a caring attitude, and to reimburse their vulnerable customers who lose substantially because of their scams" (Today Online, 2023). However, for many consumers who have fallen victim to more sophisticated fraudulent activities, bank compensation rules remain ambiguous.

This article will examine Singapore's major banks' stance on reimbursement rights for scam and fraud victims, as well as where other nations stand on compensation for scam and fraud victims.

What Is MAS Guidelines Regarding Bank Liability For Scams And Fraud?

Although the MAS has provided principles-based recommendations for dealing with scam losses, banks are not required by law to repay clients.

According to the MAS rules, banks are supposed to serve consumers fairly and to have effective mechanisms in place for fraud identification and prevention. However, final accountability is determined by whether the consumer has fulfilled their own duties.

The MAS has advised banks to be more empathetic and open with refunds for disadvantaged consumers who have been duped in situations when they have essentially satisfied their own commitments.

Case Studies: OCBC Reimbursement Of Scam Victims

  • At least 469 OCBC customers were victims of SMS phishing schemes in December 2021, with total losses believed to be over $8.5 million. All fraud victims' customers were refunded by OCBC.

While OCBC's reimbursements to hundreds of SMS phishing scam victims, particularly vulnerable seniors, have raised public expectations that banks will compensate customers during major scams, OCBC has maintained that responsibility is shared and that payouts will continue to be decided on a case-by-case basis, and legal experts say it is unclear whether OCBC's actions have definitively set a binding precedent or changed liability principles.

What Are Being Done By The Banks And MAS To Protect Consumers?

After nearly 800 OCBC customers lost around $13.7 million in total to SMS phishing scams in late 2021, the Monetary Authority of Singapore announced plans in February 2022 to develop a framework that would outline how responsibility for scam losses should be shared equitably between banks and consumers.

MAS initially stated they aimed to publish a draft of this loss-sharing framework within 3 months for public consultation. However, developing the framework has proven more complex than expected.

In parliamentary responses, MAS explained that finalizing the details has taken longer due to the intricacy of the issues involved in balancing accountability with empathy when apportioning liability for scams.

As a result, MAS now plans to release a consultation paper to seek public feedback on the proposed scam loss responsibility framework in October 2023 rather than earlier in 2022 as originally targeted. The consultation aims to involve various stakeholders in shaping how banks, consumers, and others involved can share the burden of scam losses more fairly going forward.

How Does Singapore Banks Compare With Other Countries Regarding Scam Reimbursement?

The EU has established stronger protections for consumers against bank transfer scams through regulations like PSD2 (Payment Services Directive 2) which set clear requirements for banks to detect and prevent fraud while also defining consumer reimbursement rights. Under PSD2, banks operating in the EU must have robust security systems and authentication processes to identify suspicious transactions and block potential scams.

If fraudulent transactions still occur, banks are obligated to reimburse customers the lost funds in most cases, unless the bank can prove gross negligence by the customer. For remote transactions, PSD2 caps consumer liability at €50 if they failed to properly secure account access credentials.

In general, except for UK which made it mandatory for the banks to reimburse bank's scam victim most of the countries work on a case by case basis.

There are two schools of thinking here. Making it necessary for banks to pay scam victims may encourage consumers to be lazy and careless in terms of their own responsibility to avoid scams.

While this would also push banks to spend in improving the security of e-banking systems and implementing stricter SOPs and protocols for online cash transfers.

Non or Case By Case Reimbursement Basis Approach:


  • Consumer Responsibility: Advocates of this approach argue that consumers have a responsibility to take precautions when conducting online transactions. They believe that individuals should be aware of common scams and practice good online security habits.

  • Incentive for Vigilance: When banks do not automatically reimburse victims, it incentivizes consumers to be more cautious and vigilant in their online activities. This can lead to a more informed and security-conscious user base.

  • Resource Allocation: Banks can use their resources more efficiently by assessing each case individually. They can focus their efforts on investigating legitimate claims and reducing fraud.

Mandatory Reimbursement:

  • Consumer Protection: Supporters of mandatory reimbursement argue that it provides a safety net for consumers who may fall victim to increasingly sophisticated scams. It ensures that innocent victims are not left financially devastated.

  • Investment in Security: Knowing that they will be responsible for reimbursing victims, banks may have a stronger incentive to invest in robust cybersecurity measures and enforce stricter standard operating procedures (SOPs). This can lead to an overall improvement in online security.

  • Customer Trust: Mandatory reimbursement can enhance customer trust in the banking system, as individuals feel more protected and are more likely to engage in online transactions.

What Can You Do When You Are A Victim Of A Scam?

  • Contact your bank immediately to report unauthorized or fraudulent transactions. Provide information like account details, transaction records, and scam specifics. Timeliness is key, as some banks may deny claims reported too late.

  • File a police report within 24 hours to officially document the scam. This is required by many banks for reimbursement claims. Provide details like scam amount, dates, and scammer communications.

  • Submit the scam reimbursement claim to your bank with supporting documents like your police report. Follow up persistently if needed.

  • If the bank denies your claim, consider going to mediation. The Financial Industry conflicts Resolution Centre (FIDReC) provides low-cost mediation services to help financial businesses and customers resolve conflicts. While others may claim that Fidrec's limit is merely S$100,000, which is half the daily PayNow maximum of most banks.

  • For large scam losses, consult a lawyer about legal options to recover funds. Lawsuits have compelled some banks to reimburse victims in certain cases.

  • Check if the scam transactions were covered by your insurance policies. Some insurers provide scam or fraud loss coverage such as Cyber Insurance Coverage.

  • Strengthen your account security going forward by enabling two-factor authentication, monitoring closely for suspicious transactions, and not oversharing account info.

  • Provide info to authorities/banks on the scam tactics to help investigations and protect others. Share only with reputable channels versus random people soliciting information online.

Read also: Anti-Money Laundering (AML) in Singapore: What are the Compliances and Regulations? [2023 Edition]

Read also: Understanding the Importance of Sales and Purchase Agreement (SPA) in Singapore: Essential Tips for Buyers and Sellers

Read also: Comprehensive Guide: How to Obtain a Garnishee Order and Protect Your Rights


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