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Fraudulent transactions affect Nig. business

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By Mercy Kelani

Nigerian bank customers lost N472 million to fraud in Q1 2023.

Increasing cases of fraudulent bank alerts are becoming worrisome to operators in the Nigerian financial landscape. This is owing to the fact that many citizens fall victims of scammers on a daily basis. This crime is usually perpetuated through the use of Short Message Service (SMS) under the pretense of banks’ transaction alerts to defraud ignorant citizens. Point of Sale (PoS) operators and small scale traders are the most targeted victims. Criminals use certain Apps to carry out the crime.

These apps include Lofty SMS App, Millionaire Fake Bank Account, Flash Fund App, Money Prank Pro, and Pro and fake alert maker for Android. The Central Bank of Nigeria (CBN) has affirmed that its regulatory functions is not responsible for fake financial transactions. The Director of Corporate Communications of the CBN, Dr. AbdulMumini Isa, in his reaction to this crime, stated that although this act is condemnable, the CBN is not concerned with the regulation of issues and practices that are not within the banking arena.

This situation is becoming a threat to the investments of entrepreneurs.

This act is within the regulation of the Nigeria Communications Commission (NCC) and the Telco firms, which is responsible for the telecommunication industry. However, according to a source in the Federal Ministry of Communications and Digital Economy, the NCC is working on partnering with the CBN to device a scheme that would help telecommunications companies and banks to block mobile phone lines or freeze any bank account traced to criminal transactions. The NCC would also be collaborating with the Nigeria Deposit Insurance Corporation (NDIC).

NCC collaboration with NDIC would be in the aspect of electronic fraud that has to do with e-banking transfers and Unstructured Supplementary Service Data (USSD) telephone lines. Fake credit alerts is regarded as one of the rising and infamous techniques through which criminals defraud business owners in many parts of Nigeria. This situation is becoming a threat to the investments of established and aspiring entrepreneurs. Recently, many Point of Sale (PoS) operators have become prey of this criminal act.

Total fraudulent cases recorded in Q1 2023 were 12,553.

In Lagos, Abuja, Kaduna, Kano, Ondo, Akwa Ibom, and others, the situation is the same as individuals and businesses, particularly Small- and Medium-scale Enterprises (SME), fall victim of this crime. A Lagos-based PoS operator, Mrs. Bimpe Oladele, narrated her ordeal, lamenting that her mum and sister were swindled by fraudsters who made a fake transfer of N30,000 and pressured them to releasing the money to them. Another PoS operator, Mrs. Ngozi Obinna, also affirmed that she had been scammed through fake credit alerts many times while running the business, even with its meagre profit.

Although there is no estimated amount of money that have been lost to the menace, a FITC report divulged that in the Q1 of 2023, Nigerian bank customers lost N472 million to fraud. It was also revealed that within the same period, the total fraudulent cases recorded were 12,553. This menace has made analysts believe that with a continuation in the current advance of technology, this act might erase the profits of the cashless policy, given that many business owners may insist on receiving cash only during sales.

Financial institutions should invest in digital research.

According to a telecoms expert, Kehinde Aluko, business owners are advised to tackle fraudulent alerts by checking their balance with their banks and not only with SMS alerts that are received on cellphones. The Chairman of Mobile Software Nigeria, Dr. Chris Uwaje, said that with the advent of Artificial Intelligence (AI) and Robotics, the difficulties associated with data-chaos and information overload will exacerbate. Therefore, he advised that financial institutions in the country ensure massive investment in digital research.

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