E-frauds escalate as fraudsters con banks of N325bn


Using all forms of social engineering to attack and dismantle financial architecture, fraudsters have so far conned Nigerian banks of N325 billion just as e-frauds continue to spiral skywards in the country.
Investigations by Daily Sun show that between 2000 and 2016, the financial institutions lost N325 billion by falling prey to the scammers’ use of psychological manipulations via social media and other means such as phishing, physical access or tailgating, shoulder surfing, dumpster diving and trojans. They also compromised their victims’ email accounts through smishing, vishing and by also stealing important documents.
Lamenting that all these constitute the biggest challenge facing the electronic payment system in the country, Mr. Dipo Fatokun, the Director, Banking and Payments System Department of the Central Bank of Nigeria (CBN), noted that in 2016 alone, bank customers lost over N2 billion to e-fraud, adding that, “e-fraud not only causes loss of funds, but reduces confidence of customers using the digital payment platforms.” Putting the figure explicitly, the Nigeria Deposit Insurance Corporation (NDIC), on its part, said the banks lost N2.19 billion to e-fraud last year, aside frauds, forgeries and outright theft involving bank staff, which stood at N8.68 billion.
According to its Managing Director/Chief Executive, Umaru Ibrahim, the reported cases of frauds, forgeries and outright theft involving bank staff was N18.02 billion in 2015 and N8.68 billion in 2016, while the actual losses to the nation’s banking industry stood at N3.17 billion in 2015 and N2.40 billion in 2016. Also, the level of attempted cases of frauds and forgeries stood at N0.329 billion or 11.94 per cent from N2.756 billion in March 2017 to N2.427 billion in June 2017. The Nigeria Electronic Fraud Forum (NeFF) Report unveiled recently by the CBN Deputy Governor in charge of Operations, Mr. Adebayo Adelabu, recorded that e-fraud cases stood at 19.531 in 2016, as against 10,743 in 2015, representing about 82 per cent rise.
The survey states that across-the-counter scams account for the highest value of N511.07 million. This was followed by Automated Teller Machine (ATM) with N464.5 million; internet banking N320.66 million, Point of Sale (PoS), N243.32 million, and mobile banking, N235.17 million. Other losses came from e-commerce, N132.25 million; web transactions, N83.77 million; cheques, N4.55 million; kiosks, N10.19 million; and others, N190.97 million.
The report notes that, “based on trend and human perception, it is believed that fraud rates increased towards the end of the year due to festivities and the need for people to get more money.” The report, however, states that fraud can happen at any time, and therefore, called for “preventive and detective strategies.”
Providing insight into the reason behind the drop in bank forgeries, Ibrahim explained that although reported cases of fraud and forgeries rose by 36.42 per cent from 12,279 cases in 2015 to 16,751 cases in 2016, the reduction in the rate of successful fraud incidences and actual losses was an indication of improved regulatory/supervisory oversight, increased vigilance by banks and the deployment of improved security architecture in the banking industry.
He attributed the factors breeding corruption in Nigerian banks to poor corporate governance, infractions in foreign exchange operations, cumbersome legal process and lack of effective sanctions of offenders, among others. Another case of unreported or under-reported e-fraud cases in the country is SIM swap scam. According to Fatokun, “we have heard of instances where people would say for three days my phone did not work. And because many of us carry more than one phone, if one is not working, at least one will work.
“So, what they (scammers) do is that they swap your phone. That is, they just walk up to a service provider and claim to be the owner of the line. Most often, they have studied that number and they have collaborators, probably in the banks.
“And because the process for doing a change of SIM card is so loose, the telcom company would change the SIM card for the person and so he assumes the phone number. What does he do? He puts the SIM card in another phone and starts using the USSD to make transfers out of the account into another account.”
Recall that recently, internet broadband service providers warned bank customers that app stores are full of fake apps claiming to come from banks, and that once a customer downloads and enters his or her financial information, including credit/debit cards details and Personal Identity Number (PIN), he or she may fall victim of e-fraud. To stem all these, Fatokun said that CBN and the Nigerian Communications Commission (NCC) would soon come up with tight regulations.
“In Nigeria, we have consistently, over the last three years, reduced the value of electronic fraud. The game changer is the Bank Verification Number (BVN). It is not only helping us to identify who owns what, but going forward, just as it was announced by the Bankers’ Committee at the last meeting, the BVN would be used as an instrument to track fraudsters in the system.

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