Nigerians lost N12.5bn to telecom scams as AI threat grows

Nigerians lost about N12.5 billion to telecom-related scams between 2019 and January 2023, highlighting growing risks in the country’s fast-expanding digital economy, according to a report by PwC.

The losses, based on data from the Nigerian Communications Commission, come even as telecom operators increased investments, public awareness campaigns and regulatory efforts to curb fraud across mobile networks.

Globally, telecom fraud losses reached more than $38.95 billion during the same period, PwC said in a report titled “AI’s Dual Role in Telecom Fraud.”

The firm warned that Artificial Intelligence (AI) is rapidly changing how telecom fraud works, allowing criminals to launch scams faster and at a larger scale, while also offering telecom companies powerful tools to detect suspicious activity.

“AI has tremendous potential to drive positive change across sectors, but it also enables fraudsters to create and disseminate scams quickly and at scale,” PwC said in the report.

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Telecom networks becoming key financial infrastructure

The report shows that telecom operators are no longer just communication providers but also critical infrastructure supporting digital banking and payments.

This shift is increasing exposure to fraud. PwC said that in Nigeria, 59 percent of e-banking customers have experienced scams, suggesting that telecom networks, which support mobile banking alerts, authentication messages and digital payment links, are becoming attractive targets for criminals.

As telecom networks connect more closely with banks and fintech companies, fraud incidents in one sector can quickly spread to another, leading to regulatory scrutiny and loss of customer trust.

This growing overlap between telecoms and financial services is creating a new risk layer in Africa’s digital economy, where mobile devices are often the main gateway to financial services.

AI enabling new types of scams

PwC identified several common telecom fraud methods affecting operators and users. These include SIM box fraud, SMS phishing, SIM swap fraud, subscription fraud, scam calls and international revenue share fraud.

But the report noted that AI could make these attacks more sophisticated.

Criminal groups can now use AI tools to automate scam campaigns, generate convincing messages and even create deepfake voice or identity impersonations to trick victims.

PwC said these capabilities could allow fraud schemes to spread across networks quickly, increasing financial losses if telecom companies fail to strengthen defenses.

Industry already facing high fraud exposure. The telecom, media and technology sector already experiences the highest level of fraud globally, PwC said, citing its 2022 Global Crime Survey.

Nearly two-thirds of companies in the sector reported fraud incidents, and about half of those cases involved cybercrime.

For telecom operators, the financial impact goes beyond direct losses. Fraud can damage reputation, reduce customer confidence and attract stricter regulatory oversight.

In markets like Nigeria, where telecom networks play a major role in financial inclusion and digital services, such risks could slow growth in the broader digital economy.

AI also a key defense tool

Despite the risks, PwC said telecom operators have a strong advantage in combating fraud because of the large amount of network and customer data they control.

By using AI and machine learning tools, companies can analyse network behaviour in real time and detect suspicious patterns early.

For example, AI systems can identify unusual call patterns, abnormal message traffic, or activities occurring at odd hours that may signal fraudulent activity.

Machine learning models trained on past fraud cases can also detect subtle warning signs that traditional systems often miss.

Some telecom operators have already introduced AI-powered spam detection tools that analyse hundreds of behavioural indicators before determining whether a message or call is likely to be fraudulent.

According to PwC, real-time analysis could allow telecom companies to block scams before they cause significant financial losses.

Collaboration seen as critical

However, PwC said technology alone will not be enough to tackle the problem.

The firm called for stronger collaboration between telecom operators, banks and regulators to address fraud risks across the digital ecosystem.

Telecom companies, for example, can monitor call patterns that may indicate SIM swap attempts, while banks can use their own fraud detection systems to identify suspicious financial transactions linked to telecom activity.

By sharing data and insights, both sectors could improve early detection and response.

Read also: AI-driven fraud surges across Africa’s fintech sector – Ecofin Agency

Pressure likely to grow

Experts say the pressure on telecom operators to strengthen fraud prevention is likely to increase as Nigeria’s digital economy expands and more financial services move onto mobile platforms.

With millions of Nigerians relying on mobile networks for banking, payments and identity verification, telecom companies are becoming frontline defenders against digital fraud.

PwC said a deeper understanding of how technology is changing fraud risks will be crucial for telecom operators seeking to protect customers and maintain trust in the country’s digital infrastructure.

The report suggests that the fight against telecom fraud is now entering an AI-driven phase, where success will depend on how quickly companies adapt their systems to match the evolving tactics of cybercriminals.