How financial illiteracy fuels rising fraud losses

The rise in digital transactions has resulted in a surge in fraud-related cases, driven by ignorance and gaps in financial literacy.

BusinessDay found that several individuals unknowingly share sensitive information, click on malicious links or fail to verify suspicious requests, thereby aiding fraudsters.

Experts warn that while cybercriminals have become more sophisticated, a significant portion of fraud cases stem from preventable mistakes.

Edidiong Uwemakpan, vice president of corporate affairs at Moniepoint, highlighted this growing concern recently at a press conference, noting that many individuals are unknowingly selling their personal data.

“We are seeing a rise in fraud cases where people unknowingly sell their data. We need to make it clear that sharing personal information carelessly is dangerous,” she said. “Even your bank account number is private, and you shouldn’t just share it with anyone.”

Supporting Uwemakpan’s assertion, Jedidiah Oyeneye, founder of Fraud Forensics, said, “People still make the mistake of sharing passwords. No matter how close you are to someone, you don’t know what could happen tomorrow or who else might access their device.”

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Need for financial education

This raises concerns about the urgent need for financial education and stronger consumer awareness. One of the many Nigerians who have fallen prey to this is Mama Bola, a fish farmer.

“I got a call from someone who said he was from my bank. He asked me for a code that had just been sent to me. I hurriedly checked and told him the code, only to find out that I had been logged out of my WhatsApp. It was then I realised that I had just given my WhatsApp to a fraudster. What followed was a series of calls from contacts claiming that I had asked them for money on WhatsApp,” she said.

For Tilewa Adebambi, a newspaper vendor, people from a banking platform approached her and asked that she open an account on their app.

“They said they would give us N2,000 after opening the app. I registered and returned the phone to them. While I didn’t really understand, I opened the account. Later, I realised that I was just getting alerts, but I didn’t have access to the app,” she shared.

Mama Bola and Tilewa’s experiences are not unique. Many victims, often unaware of the risks, fall for similar tactics, which experts call ‘social engineering.’

Rising social engineering scams

Social engineering, a broader fraud category, involves manipulating individuals into divulging sensitive data or making security mistakes. This is often achieved through deception rather than technical hacking, using tactics such as phishing emails, impersonation, or psychological manipulation.

It is one of the most common forms of fraud in Nigeria. Data from the Nigeria Inter-Bank Settlement System (NIBSS) highlighted that social engineering scams cost Nigerians over N8 billion, with 62,901 reported cases in 2023.

Phishing cases, another major fraud tactic, saw a 167.37 percent increase, with 4,457 reported cases, translating to N551.2 million in losses. Phishing occurs when fraudsters pose as legitimate institutions via email, telephone, or text message to trick individuals into revealing confidential information.

The NIBSS 2023 annual fraud landscape report underscores the growing threat of scams, with the total fraud count surging by 112 percent, from 44,947 cases in 2019 to 95,620 in 2023.

Also, the amount lost to fraud has skyrocketed by 496 percent within the same period, rising from N2.9 billion to N17.67 billion.

Samuel Oyekanmi, a research and insight associate at Norrenberger Financial Group, noted that curbing these cases requires security awareness.

“Many people are not well informed about the measures they need to take to safeguard their information, and this leads to the high number of fraud cases we see today. We need to address the education gap because technology itself is not the problem.”

According to the Financial Institutions Training Centre (FITC), there is a need for a structured customer awareness programme that should provide guidance on safe banking practices and highlight warning signs of fraud.

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“Furthermore, these awareness initiatives should be available in local languages to ensure accessibility across different geopolitical zones,” the body added.

Financial institutions have begun to educate customers about socially-engineered fraud caused by ignorance. Moniepoint, for example, has announced plans to prioritise financial education in 2025, with a strong focus on helping Nigerians protect themselves against fraud.

Abass Suara, a strategy and corporate innovation consultant, noted that socially- engineered fraud often targets vulnerable groups such as older adults, low-income earners, desperate job seekers, and students.

He emphasised the need for specialised educational programmes tailored to people’s literacy levels. Victoria Adaramola, an analyst at Tech Hive Advisory, noted that cybersecurity awareness is not just about knowing the risks; it requires constant vigilance.

“People need continuous reminders and practical steps to protect themselves. A simple measure like enabling multi-factor authentication or using Google Authenticator can be the difference between staying safe and getting hacked,” she said.