Every day between January and March 2022, there was an average of 450 incidents of frauds and forgeries against Nigerian bank customers. Computer/web fraud, mobile banking fraud, and ATM withdrawals had the highest fraud occurrences.
In those three months, the attackers targeted N14.65 billion, with Computer/Web Fraud responsible for N10.57 billion (72.18 percent), and Mobile Fraud recording 1.48 billion (10.08 percent).
When the dust had settled, the 40,522 attacks had resulted in N1.54 billion lost by bank customers. Computer/Web Fraud accounted for 70.51 percent (N1.07 billion), followed by Mobile Fraud accounting for 17.58 percent (N270.92 million). These insights were gleaned from data by FITC, an organisation which does quarterly reports and has the Central Bank of Nigeria, the Nigeria Deposit Insurance Corporation and all licensed banks in Nigeria as Institutional Members. The data, BusinessDay learned is gotten from the monthly submission of fraud returns from all Deposit Money Banks (DMBs).
Furthermore, a 2022 survey by Agusto & Co found that approximately 59 percent of respondents had been fraud victims on the digital platforms of their banks.
Still struggling to tame fraud, failed transactions, and lack of punitive measures for banks that disregard the timelines for resolving these issues, Nigeria’s cashless policy is sputtering to life with the recent replacement of some banknotes by the Central Bank of Nigeria. The apex bank also issued a range of directives that aim to curb cash-based transactions.
As technology gained more foothold in driving the banking industry (and financial inclusion too), with it came an equal or more spike in exposure to fraudulent attacks. As experiences and data show in Nigeria, it has also resulted in losses for thousands of those embracing it.
Many take to social media to voice their frustration when they have become victims of either fraudulent attacks or failed transactions that do not get reversed. If their story trends enough, they might be lucky enough to get the attention of the bank, who would promise to look into their case. Whoever fails to get the bank’s attention – on or off social media – is left to lick his or her wounds in despair.
Going cashless is not the problem… The challenge is ensuring banks’ customers remain safe from fraudulent attacks, especially through electronic channels, and perennial complaints of failed transactions
One Saturday in October 2022, Victor Obayagbona, started receiving One-Time-Passwords (OTPs) for a pending transaction. He was with his Access bank debit card and had not initiated any transaction, so he kept ignoring the messages until the seventh one came in. He called the bank’s customer care line, which rang out several times without anyone responding.
By the time he checked his phone, there was an eighth notification waiting for him from the bank. He had been debited N50,000 for a deposit placed on a betting website.
“I have never tried betting in my life,” said Obayagbona, who is in his fifties, his response conveying the pain of his hard-earned money being used for something he had never indulged in.
OTPs are often sent to a bank customer when their card is being used for a web transaction, and without supplying those codes, the transactions are to be declined. “If I never provided the OTPs sent to my phone, how was the transaction successful?” he asked this reporter, rhetorically.
When he complained to the bank about the fraudulent transaction, he was told an investigation would be conducted. Days later, the bank told him the transaction was authorised. For the bank, there was no fraud committed and his case will likely not be counted among fraudulent cases and monies lost this year. Yet, like him, experiences abound of people who were in possession of their debit cards, yet the same cards were used to make transactions in places they have never even been to, and especially on betting websites.
Data by the Nigeria Inter-Bank Settlement System Plc (NIBSS) shows that fraud attempts via mobile channels saw a 330 percent increase year-on-year (YoY) between 2019 and 2020, while attempts via web and POS channels saw a 173 percent and 215 percent increase YoY. In those nine months, nine out of every ten attempts were successful, and there were 46,126 of such attacks.
“This trend is expected to continue as Nigeria further grows financial inclusion and customers become increasingly dependent on electronic channels for their day-to-day transactions,” said NIBSS, an organisation jointly owned by all licensed banks including the CBN.
Like fraud, failed transactions remain a nightmare
Going cashless is not the problem, it is in fact the way forward, some experts told this reporter. The challenge is ensuring banks’ customers remain safe from fraudulent attacks, especially through electronic channels, and perennial complaints of failed transactions, which they say are insufficiently addressed.
Visits to customer service units of some of Nigeria’s major banks show that seven out of ten people on the queue were there for either of two things: a failed transaction (that had not been reversed) or an unauthorised/fraudulent transaction.
“Part of the reasons some people are not comfortable with electronic transactions is because of risks and exposure to electronic and cyber crime, and sometimes the unreliability of some of the channels,” Muda Yusuf, chief executive officer, Centre for the Promotion of Private Enterprise (CPPE), said in a phone interview.
“When there are failed transactions, sometimes it could take up to a week or a month, sometimes people just give up on some of these transactions,” Yusuf said. “Some of these issues are related to technology itself; fraud and inefficiency of those systems, and all these concerns need to be addressed in pushing the cashless policy forward.”
In 2020, the Central Bank of Nigeria issued a revised timeframe for resolution of failed transactions. The directives included instant reversal or within 24 hours of failed ATM transactions when customers withdrew from their own banks; not more than 48 hours reversal when customers withdrew from other bank’s ATMs. Also, banks were to resolve all failed point of sale (POS) and online/web transactions within 72 hours.
In reality, failed transactions could take weeks or months, and in some cases, never resolved until customers give up fighting. For others, social media becomes their preferred tool to fight back.
“I had a transaction denied at a POS on 6th November. The following day, I sent a copy to my @gtbank account officer. Till today, more than 4weeks on; my over 100k has not been reversed. And you want me to avoid carrying cash? Fix the infrastructure and we will happily go cashless,” wrote Charles Omole, via his twitter handle, @drcomole, while commenting on the cashless policy of the CBN.
His tweet saw the usual torrent of people with the same or worse experiences, calling out the various banks that had their funds stuck for varying lengths of time. The following day, December 21, after his tweet had gone viral, he was back with a new post. The bank had suddenly returned his funds even when up until the day of his initial tweet had said there was nothing they could do.
But not everyone gets lucky. Ayo Awotunde took his wife and two children; a two-year old and a six-month old to God’s Will Stores in Oyo town to get new shoes. This was on the 17th December, one week to Christmas, and after an hour looking around, the family had selected new school shoes, a loafer and dress shoes for his baby, a pair of sandals and loafers for his wife and a sandal he felt he could wear to work.
It was time to pay and he had moved some money from his corporate account to his Kuda Bank account for the shopping purpose. Also, he explained that the corporate account did not have a debit card but could only transfer or issue cheques, both of which the store would later say it does not collect.
“Sum to pay was N16,200. It was keyed and I inputted my card PIN. Immediately, I was debited, but the POS machine said the transaction was declined!” said Awotunde in a chat, where he also shared a copy of the POS print out.
He was told to wait a while so that it would be reversed, and after a 30-minute wait he said, “by now, my babies were hungry and getting restless,” so he decided to make another attempt.
He made another transfer of N20,000 from his company account to the same Kuda (his only account with a debit card), went across the street from the store to use a commercial POS where he was again debited but the POS receipt read; declined.
“I was furious”, he said. “At that point I just decided to return the shoes and leave the store.”
As at the time of going to press, his funds were yet to be reversed despite numerous messages to complain to his bank. The new shoes for Christmas could not be bought for his children, his wife, and his own ‘work shoe’.
When a N1000 note is presented at a store after buying goods, the transaction ends there if it covers the goods bought and the store may even have to give some balance to the buyer if needed. However, technology was supposed to make this even more seamless, making cash less attractive. But this was until people realised their money could either be stolen electronically without consequence, or their transaction declined and they are stuck; money has left their account but not delivered to the merchant so they cannot get goods or services paid for either. A double loss.
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With those typically considered ‘unsophisticated’ and constituting more of the financially excluded now having to embrace digital banking platforms, the risk of increased frauds also heightens. For industry watchers, it could be open season for fraudsters to step up their onslaught against bank customers, while millions of account holders also continue dealing with a plague of failed transactions.
Even as Yusuf of CPPE says there are more successful transactions than failed ones, he acknowledges that the nightmare of a failed or fraudulent transaction, however little is enough to cause serious concern in implementing the cashless policy.
The seemingly isolated losses or failed transactions of one man could very easily become a nightmare for even more bank customers. Already, fraudulent attacks are growing every year, as official data shows. With more people going digital, the future is best imagined through the twin factors of fraud and failed transactions that remain largely unresolved.
More billions of naira could be lost, and more lives imperiled.
Despite mandatory data linkage (Bank Verification Number, National Identity Number) and a host of other measures, financial crimes continue to be committed through mobile lines and bank accounts, and little to show justice is being served.
Even law enforcement officers extorting Nigerians, especially police officers are not left out. They have been reported to use either bank accounts or POS devices to make their victims part with funds. Some of the corrupt officers who are later apprehended have sometimes been publicly disgraced. But not all are caught, and certainly not the cybercriminals behind the scenes; using cards of someone in Lagos to make purchases in Kano or to place a bet in Onitsha.
