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Fraud affects Nigeria’s cashless policy

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By Mercy Kelani

Bank customers lost N1.54 billion to fraud after over 40,500 attacks.

Between January and March, 2022, an average of 450 Fraud incidents and forgeries were recorded against Nigerian bank customers; the highest fraud occurrences were mobile banking fraud, computer and web fraud, and ATM withdrawals. Within the three months of the fraud incidents, the fraudsters’ target was N14.65 billion. Computer/Web fraud accounted for 72.18 percent (10.57 billion) while Mobile fraud recorded 10.08 percent (1.48 billion). After recovering from the fraud, it was recorded that there was 40,522 attacks and bank customers lost N1.54 billion to it.

According to Agusto and Co. 2022 survey, it was deduced that about 59 percent of respondents were victims of fraud on their banks’ digital platforms. Despite the struggle to stop fraud, failed transactions and lack of punitive measures for banks that do not regard the procedures of resolving fraud issues, Nigeria’s cashless policy is gaining more ground which is more encouraged by the recent change of some banknotes by the Central Bank of Nigeria. This is backed up by CBN’s issuance of a range of directives that focus on curbing cash-based transactions.

Fraud attacks via mobile channels increase by 330 percent YoY – NIBSS.

Technology has gained more foothold in the running of the banking industry and financial inclusion and has also caused an equal increase of exposure to fraudulent attacks. According to Nigerian data and survey, thousands of people who have embraced this technology have suffered huge losses. Some of those who have fallen victim of fraudulent attacks or failed transactions resort to Social Media to speak out their frustrations. While some who are usually lucky enough to get the attention of the bank – when their story trends – get their case looked into, those who do not attract the attention of the bank brood over the issue in despair.

Data gathered by the Nigeria Inter-Bank Settlement System Plc (NIBSS) reveals that fraud attacks through mobile channels increased by 330 percent year-on-year (YoY) between 2019 and 2020. Fraud attacks through web and POS channels likewise increased by 173 percent and 215 percent YoY, respectively. During this period, nine of every ten attempts succeeded; in total, there were 46,126 of these attacks. NIBSS stated that this trend is likely to continue as Nigeria continually grows financial inclusion and customers become highly dependent on electronic mediums for day-to-day transactions.

BVN and NIN do not assure safety from financial crimes.

Some experts affirmed that while the cashless policy is not a problem, the challenge is with ensuring that customers of banks do not fall victim of fraudulent attacks through electronic channels and regular complaints of failed transactions which are reportedly addressed inadequately. Numerous visits to customer service units of some of the major banks in Nigeria reveal that seven out of ten people in the waiting queue were either there for a failed transaction that had not been reversed or an unauthorized transaction.

The Chief Executive Officer of Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, asserted that some people are uncomfortable with electronic transactions as a result of risks and exposure to electronic and cyber crime and unreliability of some of the electronic channels. This discomfort is linked to the fact that with the compulsory data linkage – Bank Verification Number (BVN) and National Identity Number (NIN) – and other measures, Financial Crimes do no cease to be committed via mobile lines and bank accounts. Therefore, to move the cashless policy forward, issues related to technology – such as failed transactions – fraud and inefficiency of the systems, and other concerns need to be thoroughly addressed.

Despite CBN’s directives, failed transactions are not always attended to.

Central Bank of Nigeria, in 2020, announced a revised timeframe to resolve failed transactions. According to the directives, instant reversal or reversal within 24 hours should occur in cases of failed ATM transactions when customers withdraw from their banks; when failed ATM transactions occur from other banks’ ATMs, a reversal of funds should take place within 48 hours; failed POS and online transactions are also to be resolved by the bank within 72 hours. Notwithstanding these directives, failed transactions take weeks or sometimes months to be addressed, and at times, no resolution at all.


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