Jessica Ayodele, an X user had disclosed that three people in her circle had their identities impersonated in two weeks with criminals using their real names to open accounts and commit fraud.
She said, “Seeing this fraud trend recently on one of the fintech platforms, this is the third person in my circle complaining in two weeks, that the scammers used their legal names to open accounts and contact their friends for money using patterns in WhatsApp messages.”
According to IBM’s 2024 X-Force Threat Intelligence Index, identity fraud has become a global crisis as cybercriminals exploit user identities to compromise enterprises globally.
“The global trend is prominent in the Middle East and Africa region (MEA), with the use of valid local accounts and valid cloud accounts becoming the primary cause of cyberattacks against organisations in the area,” the report said.
Nigeria’s rising fraud incidents can be linked to poor digital and financial literacy, Temitayo Oduwole, Head of IT and Payments, PalmPay, observed that customers do not take prompt action in incidents of fraud and that “Only 33 percent report the same day or take the necessary right action on the same day.”
“Effective investigation into incidents of fraud begins when the user reports to their bank that fraud has occurred. However, fraud if not reported within the hour the crime occurred, allows criminals to move the stolen funds to ‘safe’ places,” Oduwole said.
Nigeria-Interbank Settlement Scheme (NIBSS) disclosed that the rise of digital payment platforms in Nigeria has increased the potential for cyber fraud, drastically affecting fintech platforms. Incidents of “Fraud loss via Internet banking increased by 325 percent between 2022 and 2023.
With an estimated 83 million internet users in Nigeria, with the figure expected to increase by 48 percent by 2027, and a projected rise in smartphone users to over 140 million by 2025, the rising incidents of fraud were only a matter of time.
To curtail the rising fraud cases, the Central Bank of Nigeria (CBN) issued a directive that imposed significant restrictions on Tier 1 bank accounts without a Bank Verification Number (BVN) or National Identification Number (NIN).
The CBN’s circular, issued on December 1, 2023, said, “The mandatory requirement for all Tier-1 bank accounts and wallets to be linked with a BVN and/or NIN.”
Tier-1 accounts are bank accounts that can be opened with a valid identity or proof of address, with the maximum daily transaction limit for a Tier-1 account is N50,000, and the maximum account balance is N300,000. Also, it remains mandatory for Tiers 2 and 3 accounts and wallets for individual accounts to have BVN and NIN, too.
As a result, users of fintech platforms like PalmPay and, OPay among others that use phone numbers as account numbers without proper KYC requirements will be placed on ‘Post No Debit or Credit,’ rendering them incapable of conducting debit transactions.
Also, the Fintech Association of Nigeria (FintechNGR) plans to unveil a fraud reporting framework this year while fintech platforms such as PalmPay continue to take the initiative to reevaluate their in-app safety features to protect their users from the activities of fraudsters.
Since launching in Nigeria in 2019 under a Mobile Money Operator (MMO) licence by CBN, PalmPay has grown to over 30 million users as part of its payment ecosystem.
In building a user-friendly app, PalmPay runs in-app multi-factor security authentication features that allow for real-time continuous monitoring, analysis, and quick response to fraud threats.
Chika Nwosu, PalmPay Nigeria Managing Director said, “We have a customer support team of over 300 representatives that ensure about 90 percent of issues are resolved within 24 hours and 98 percent within 48 hours, via our multiple channels including in-app live chat, calls, emails and social media, and wallet safety workshops across our media channels to enlighten users on ways to secure their wallets.
“Also, to reduce incidents of fraud, protect users from fraudsters, and provide a safe banking environment for all, PalmPay binds users’ phones to the app and has an auto-logout and biometrics feature to confirm users’ identity,” he said.
Integrating security features has been a watchword for the company. He said the “1 Million Shield” feature protects users’ funds by offering a coverage facility.
“The feature provides enhanced coverage of up to N1 million annually and up to N50,000 per transaction for any loss due to unauthorized transactions,” he said.
He stressed that, to receive compensation the company would review and confirm the authenticity of the user’s application, after which the compensation amount will then be automatically transferred to your PalmPay balance account.
In general, PalmPay employs a closed-loop risk management system that involves continuous monitoring, analysis, and response to fraud threats and allows it to detect and prevent security risks in real time and reduce the potential impact of fraud.
