Editorial | Nip new BPO scam

Given the reputational and other risks to their operations, Jamaica’s business process outsourcing (BPO) firms have been surprisingly muted about the latest scam to hit the sector since it was highlighted by this newspaper a fortnight ago. Similarly surprising has been the quietude of the Government, especially the industry and investment minister, Aubyn Hill.

Perhaps their silence indicates a belief that the issue was overblown and that the matter is under control. Which we hope is the case.

However, we caution the authorities against causing hubris to deter appropriate interventions, and remind of when denial and slowness facilitated the entrenchment of so-called lottery-scamming schemes, which came close to destroying the BPO sector.

It is not our sense that sums involved in the latest thievery, of BPO employees siphoning to themselves gift certificates intended for clients, is near the amounts of the lotto scam, which at its peak reached, the Americans said, over US$300 million a year. Nonetheless, there are other factors that make this potentially worse for the firms and the Jamaican economy.

CANNOT BE EASILY PASSED OFF

First, this is a theft that cannot be easily passed off as tangential to BPO operations, with the perpetrators outside the companies. In this case, it is the firms’ employees who directly steal from the firms, or more correctly, the firms’ clients. That is a breach of trust that can cause major reputational damage and a loss of business to individual companies, and the sector as a whole.

Further, these schemes have emerged at a time when advances in artificial intelligence are raising questions about the efficacy and the economics of international companies offshoring some of their back-office operations to low-wage economies like Jamaica. If those firms lose confidence in Jamaica, it could well accelerate the pace at which they withdraw from the island, faster than the pace at which domestic BPOs can move up the industry’s food chain, where higher skills are required.

Jamaica’s BPO sector employs around 60,000 people and grosses nearly US$1 billion. It is the third-largest earner of foreign exchange after tourism and remittances.

Most of those jobs, though, are at the lower or entry-level end of the industry. But there is no gainsaying their importance to Jamaica, including their contribution to the island’s historic low unemployment rate.

For many years the sector endured a testy relationship, if not charmed existence, with the sources of most of its clients, the United States. Employees stole so-called lead sheets – or documents with biographic information of the clients of the firms for which the BPO companies worked. These lists were sold to extortionists who used them to target victims – mostly vulnerable old people – who were told they had won sweepstakes or some other form of lottery, but had to remit money to the scammers to cover taxes and other costs of retrieving their winnings.

LOTTERY SCAMMING

In Jamaica, lottery scamming has been linked to a rise in gang violence as rival groups became wealthy and warred for control of the business. Under pressure from the US, concerned over the bilking of its citizens, Jamaica toughened its laws for electronic fraud.

Lottery scamming has not disappeared, but is these days less of a Jamaica-based phenomenon. Many recent convictions have been for schemes run from the United States, even if key players were from, or in, Jamaica.

The new scheme, of which The Gleaner reported recently, does not appear to have the volume, intensity, and, thus far, the violence associated with it as lottery scamming. But its cumulative impact is potentially very damaging for the business.

When faced with dissatisfied customers, firms sometimes attempt to assuage them by offering gift vouchers to be redeemed for goods and services. These vouchers can value between US$10 and US$400.

Apparently, BPO employees who interact with aggrieved customers have found ways to divert some of those vouchers to themselves, which they either convert to goods and services for themselves or sell on the blackmarket. One perpetrator claimed that in a good month she could earn up to J$4 million from the scheme.

That schemes can exist in companies suggest weaknesses in their management and operational oversight. That demands urgent attention. For the impact is not only on firms hit by the fraud, but the entire Jamaican industry, which suffers reputational damage.

The point is, apart from the growing technological stresses on the industry, many jurisdictions compete for BPO jobs. And if we are to be frank about it, the industry can also be footloose.

We therefore know what can happen if foreign firms lose trust and confidence in their Jamaican partners. Which is why the Jamaica authorities and the BPO firms should say what is being done to nip this problem before it escalates.