• Tuesday, May 28, 2024
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BusinessDay

Implications of rising ATM fraud

Stop ATM charges, bank customers urge CBN

Akin Yusuf

I am seriously worried about the rising cases of ATM fraud around the country. The consequence of this is likely to be two fold. First, it is possible that several Nigerians may abandon (this is already happening) the use of ATMs, which were only introduced three years ago. Of course, no one would blame them if they do, at least not in these days of biting economic challenges. No reasonable person would want to lose his/her hard earned resources to the multitude of soldiers of evil fortune that abound in our cities and villages. Secondly, and perhaps more importantly, this will further retard the growth of Nigeria’s banking industry. Recall that in spite of the noise being made by stakeholders in the sector, it is evident that less than 40% of Nigerians patronize banks. You can then imagine what is likely to happen with a further loss of confidence in the system as is imperative with the prevalence of ATM fraud.
By the way, Automated Teller Machines (ATM) are computerized telecommunication devices that provide customers of financial institutions with access to financial transactions in public places without the need of a human clerk or bank teller. Thus, the customer is usually identified by inserting a plastic card with a magnetic stripe or a plastic smartcard with a chip that contains a unique card number and some security information such as an expiration date and personal identification number (PIN). ATMs are usually placed in strategic locations including shopping malls, airports, grocery stores, petrol stations, restaurants as well as places where large numbers of people usually gather.

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At present there are about 7, 000 ATMs in Nigeria scattered in the nooks and crannies of the cities. These machines, particularly since they were introduced three years ago, have been quite useful to customers given that it enables them to have access to their accounts at all times. Many in fact, point to these machines as one of the major benefits of the banking sector consolidation. But that may be end of the sweet story, as ATMs have recently become a source of sorrow and concern to majority of bank customers across Nigeria. They have become major targets of fraudsters who often steal or copy customers PIN codes with a view to defrauding them later. As things stand now, not even the banking sector regulator (Central Bank of Nigeria), service provider (Interswitch), law enforcement agents or the banks have been able to find any lasting solution to this problem. Hence, on a daily basis Nigerians fall prey to the gimmicks of these fraudsters who defraud them regularly.
As the problem persists the Central Bank of Nigeria (CBN) in a bid to find solution has ordered all banks to move from the magnetic stripe protected ATM cards to a more advanced card protected with electronic chip. This is the Verve Card, which at the moment, is believed to be the only Chip and PIN Card that has international security features, and also addresses local security concerns. At the same time, Interswitch Nigeria Ltd. (the main ATM company in Nigeria) has continued to run public service announcements on both radio and the Internet warning account holders to always be careful when using ATM cards and never to disclose their PIN to anybody.
But the banks must also be blamed for allowing this problem to reach a crisis point. Unfortunately, in a bid to outshine one another, these banks in most cases did not take adequate precaution especially to protect their customers from the hovering fraudsters. They never even carried out sufficient enlightenment to educate their customers on how to protect their ATM cards and PIN codes. Neither could they be said to have deployed sufficient security cameras and guards to protect these machines. Furthermore, these cards have so far been issued indiscriminately to the point that even illiterate customers, who frequently rely on help to operate the machines, were subtly forced to acquire them. In such cases, how then would you guarantee security of their PIN codes?
Nevertheless, we cannot afford to throw away the baby with the bath water. Despite the pain it has brought to many, ATM is still the answer to achieving a cashless society as well as immediate solution to pressing issues. Hence something has to be done urgently to make it safer, more secure, risk free and convenient for cash transactions. For a start, all banks must speedily migrate to the Verve Card even as they begin to teach their customers how to secure their cards and PINs. On their own, bank customers must begin to adopt basic precautionary measures including: avoiding to use ATMs once they feel unsafe; standing close to the machine especially to block the view of possible intruders; avoiding to count cash at the ATM points; avoiding to use machines located in places that are not properly lit; and, never to let anyone stand too close to them once they are using these machines.
Certainly, Nigeria is passing through the developmental stages of e-payment and e-commerce. Even the developed economies that started using ATM since it was developed by De La Rue and installed first in Enfield Town North London, United Kingdom in 1967 by Barclays Bank, still suffer occasionally from the nefarious activities of fraudsters. The way to go, however, is to adopt a concerted approach by all stakeholders including banks, the law enforcement agents and members of the public with a view to attacking the problem at its root. And we have to speed up the process before these boys unleash an irreparable damage to the industry.