Syndicates Conning EPF Members to Make Fraudulent Withdrawals

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Pressured by the rising cost of living, difficulty in getting loans and ignorance on the terms and conditions of withdrawal are among reasons which have led Employees Provident Fund (EPF) contributors to be duped into withdrawing their savings hastily.

  • Syndicates charge exorbitant services fees of 10%-40% for illegal EPF withdrawals
  • Members may end up cheated of the withdrawals
  • Punishment for illegal withdrawals – up to 3 years’ jail, RM10,000 fine, or both

Malaysian Muslim Consumer Association (PPIM) chief activist Datuk Nadzim Johan said due to the pressing situation some contributors were willing to cooperate with syndicates or fraudulent agents to withdraw their EPF savings illegally by providing false documents for some quick cash.

He said it was revealed that some contributors collaborated with housing developer companies and real estate agents to enable them to withdraw their savings despite being aware that this was an offence.

“The syndicates or agents will often target private sector employees between the ages of 30 and 50 and will gather details on their victims before approaching them to discuss on how their EPF contributions could be withdrawn,” he said.

Sharing on his encounter with victims who have been duped by the syndicates, Nadzim said some of the victims admitted that they went through tremendous pressure after dealing with the syndicates because they felt guilty they had cheated and were also swindled after their savings were withdrawn.

“Some admitted that the withdrawal was not for the purpose of buying a property as stated in the documents submitted but they were in need of quick cash and were influenced to believe that they have every right to the money,” he told Bernama.

He said although the number of complaints received from victims was still low the issue of contributors collaborating with the syndicates should be addressed and stopped immediately.

According to him, the victims were charged exorbitant service fees of between 10 and 40% of the withdrawal amount but most unfortunate were those who did not receive a sen.

“We advise contributors to value their hard-earned contribution and not to be easily deceived by syndicates or agents who claim they could assist with the illegal withdrawal as the EPF had never appointed any third party or charged any fees in handling withdrawal applications, he said.

Meanwhile National Council of Professors (MPN) Economic and Management Cluster committee member Prof Datuk Dr Mustafa Mohd Hanefah said lack of financial planning and uncontrolled use of credit cards made it easy for opportunists out to take advantage of potential benefits

Even though no formal complaints have been lodged, the Universiti Sains Islam Malaysia (USIM) Faculty of Economics and Muamalat lecturer said such a situation had led contributors to borrow money from certain syndicates to settle their debts before they became indebted to the syndicates.

“The syndicate will then recommend that the victims withdraw from their EPF savings and offer assistance in making the withdrawal thus getting them involved with the submission of false documents to facilitate approval from EPF,” he said.

He said the same modus operandi was being used to get students from higher education institutions, especially from middle-income families to persuade their parents to withdraw their savings from Account 2 for the purpose of financing their studies.

“We are aware that students can be easily deceived even into signing fraudulent arrangements by multi-level marketing (MLM) companies and for that reason, USIM would often brief new students on the importance of the EPF contributions as well as its withdrawal process,” he said.

Earlier, the media reported that EPF has lodged police reports on 312 fraudulent withdrawals involving contributors and two private higher education institutions which had conspired in fraudulent EPF withdrawals with the pretext of conducting study courses at the institution.

Meanwhile, the EPF advised contributors not to be deceived by syndicates which used the EPF logo to advertise their services to convince and dupe the public into making use of the Account 2 withdrawal facility through the social media.

In cautioning the public to be vigilant over such advertisements the EPF reminded that it had not endorsed any party to facilitate members’ application for withdrawals and members who met with the criteria should deal with the EPF directly.

According to press reports, 85 fraudulent withdrawal cases were recorded by the EPF in 2015, 152 cases were reported last year and up to June this year there were 63 cases.

Fraudulent withdrawals, which involve the submission of falsified documents by members to facilitate the approval of EPF withdrawals, is an offence under EPF Act 1991.

Under the Act, members found guilty are liable to a maximum jail sentence of three years or a fine of RM10,000, or both.