Social engineering, website hacking lead channels Nigerian bank customers lost money in 2023

Social engineering, website/server hacking and robbery lead channels through which Nigerian bank customers lost most money from January to December last year, new data has shown.

According to the Fraud in Nigeria’s Banking Sector (2019-2023), report by the Nigerian inter-bank settlement scheme analysed by SBM intelligence, bank customers in Nigeria were defrauded through 14 channels in 2023.

The report disclosed that the amount lost through Social engineering rose to N9.37 billion in 2023 from N8.02 billion in 2022, followed by website/server hacking which rose to N2.43 billion from N6.2 million, and robbery which rose to N1.6 billion from N437 million.

Others include Pin Compromise from N852 million to N1.3 billion, Internal Collusion from N1.5 billion to N1.03 billion, Phone Theft from N259 million to N317 million, SMShing from N1 million to N31 million, Vishing from N33 million to N3 million, Fake Assistance from N133 million to N1 billion, Missing/lost card from N135 million to N132 million, Phishing from N241 million to N551 million, Lack of 2Factor Authentication N137 billion to N192 billion, Card Theft N916 million to N658 million and Others N257 million to N363 million.

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According to the report, fraud losses in Africa’s most populous nation have increased by 496.96 per cent over the past five years fueled by the rise of electronic payments.

Bank customers lost N59.33 billion between 2019 and 2023, with losses increasing from N2.96 billion in 2019 to N17.67 billion in 2023. “The amount lost to fraud has increased over the past five years along with the growth of financial transactions in the digital payments sector,” NIBSS highlighted.

Electronic transactions have jumped 463 percent to N611.06 trillion in 2023 from N108.42 trillion in 2019. This has been attributed to the surge in mobile transfers.

In this period, mobile subscriptions have grown by 21.68 per cent, from 184.43 million as of December 2019 to 219.3 million as of March 2024.

The NIBSS’s ‘Annual Fraud Landscape’ report revealed that in 2023, fraudsters successfully scammed over 80,658 bank customers, a 4 per cent decrease from the 84,130 victims in 2022.

Scammers primarily targeted individuals aged 40 and above and generally exploited vulnerabilities in mobile banking to carry out most of their attacks. While the total number of reported fraud incidents\ decreased by six per cent, the actual losses incurred by victims rose by 23 per cent.

Financial institutions submit fraud data to NIBSS via its industry fraud reporting portal. “Out of 163 institutions profiled in 2023, 60 reported. This resulted in an overall compliance rate of 37 percent, with 63 percent being non-compliant,” it said.

Of the total fraud count in 2023, deposit money banks had 92 per cent (88,112), and other financial institutions had 8 per cent (7509). Mobile channels recorded a five percent rise in attacks compared to 2022, becoming the most vulnerable to fraudsters. Social engineering remained the most persistent and dominant technique employed by these fraud actors.

“The Mobile channel was statistically the most profitable channel for fraudsters in 2023 with a Fraud Interest Index of 34 percent. It is followed by Internet Banking and POS with 33.99 percent and 26.37 percent, respectively,” NIBSS noted.

The United States, followed by the United Kingdom and Ireland, is the top foreign country where Nigerian bank customers were defrauded. However, most attacks were local.

As a preventive measure, the NIBSS emphasised the importance of fraud education, particularly for the vulnerable demographic (40 years and above). It declared that while there might have been a decline in overall fraud count, there is still much to do.

The trend is “urging the financial industry to remain vigilant, enhance security measures, and collaboratively address the tenacious challenges posed by fraud. Some regulations need thorough examination, modification, and reinforcement to reduce the potential for fraud and enhance the chances of successful recuperation,” it said.