Fraudsters successfully scammed over 80,658 Nigerian bank customers in 2023, a 4 percent decrease from the 84,130 victims in 2022. While this was a decline, it is still enough to cast a shadow on the growth of electronic payments in the country.
Fraud losses have risen by 496.96 percent over the past five years, and financial institution customers have lost N59.33 billion between 2019 and 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,” the Nigeria Inter-Bank Settlement System said in its fraud watch report.
The NIBSS highlighted that scammers primarily target people aged 40 and above, followed by those between 30 and 39, 20 and 29, and 0 and 19. Of the total fraud count in 2023, deposit money banks had 92 percent (88,112), and other financial institutions had 8 percent (7509).
Social Engineering, the use of deception to manipulate individuals into releasing their confidential or personal information, remains the most predominant technique employed by fraudsters. However, it is not the only technique scammers used. Here are the top ways Nigerians were scammed in 2023:
1. Social Engineering: It was used for 62,901 scam cases, amounting to N8.03 billion in losses.
2. Robbery: This recorded an 89.13 percent increase, underscoring rising insecurity in the country. 10,179 cases were recorded, and N1.61 billion was lost.
3. Card theft: This fraud occurs when someone steals another person’s card or virtually hacks its details. It was used 6,825 times, resulting in N658.8 million in losses for financial institution customers.
4. Phone Theft: In 2023, 2,796 incidents caused N317.7 million in losses for financial institution customers.
5. Lack of 2FA: The lack of two-factor authentication, a type of multi-factor authentication that cross-verifies users with two different forms of identification, was responsible for 1,733 scam cases in 2023 and translated to N192.3 million in losses.
6. PIN compromise: passwords to accounts obtained illegally by a third party led to 5,273 fraud cases, translating to N1.30 billion in losses.
7. Phishing: This type of fraud occurs when a bank customer is contacted by email, telephone, or text message by someone posing as a legitimate institution (like their bank). It recorded a 167.37 percent growth to 4,457 reported cases, translating to N551.2 million in losses.
8. Missing/lost card: 525 cases were carried out, and N122.2 million was lost with this technique.
9. Fake assistance: This led to 419 fraud cases, translating to N1.01 billion in losses.
10. Vishing: This is a form of phishing. Actors use phone calls to trick victims into providing sensitive information, like login credentials, card details, or bank details. It was used 50 times and translated to N3.80 million in losses.
11.SMShing: is a form of attack that targets mobile device owners. Scammers use SMS or MMS for this. It led to 222 fraud cases and N30.7 million in losses.
12. Internal Collusion: 15 fraud cases were caused by the illegal activities of people privy to customers’ details within a financial institution, resulting in losses of N1.04 billion.
13. Website/server hacking: 39 incidents of this made financial institution customers lose N2.44 billion
14. Others: N 363.3 million was lost to fraud types such as compromised terminals, fake instructions, fake mobile apps, cloned cheques, cash deposit suppression, chargeback, stolen/lost cheques, merchant collusion, sim swap, forged signatures, fake internet banking websites, cash theft, malware attacks, and skimming.
The NIBSS noted that the ratio of total reported fraud value to the total value of transactions recorded over the last five years has risen from 0.0019 percent to 0.0022 percent. In 2023, mobile, web, and PoS channels were the most exploited payment channels by fraudsters.
“Fraud loss via Internet Banking increased by 325 percent between 2022 and 2023. This is largely due to a N2.4 billion internal fraud on corporate accounts reported by a deposit money bank.”
As a preventive measure against scams, the NIBSS emphasised the importance of fraud education, particularly for the vulnerable demography (40 years and above). It urged the financial industry to remain vigilant, enhance security measures, and collaboratively address the tenacious challenges posed by fraud.
