Sad and painful tales of bank customers who have lost their life savings and entire business funds to fraudsters have raised many questions of whether e-banking is a blessing or curse to the financial services industry, OYETUNJI ABIOYE writes
The sun was set at noon for Idongesit Umoh, an entrepreneur, when electronic fraudsters cleared approximately N2.1m within 30 minutes from her account on June 8, 2017.
She runs a micro small business, which manufactures and retails handmade footwear and accessories using genuine leather and African fabrics for men, women and children.
Her business has won several awards and recognition from several multinationals. Earlier in the year, she got shortlisted by the Mandela Washington Fellowship as one of the 101 outstanding young leaders in Nigeria to undergo six-week training in the United States (all expenses paid).
On June 7, Umoh transferred N1.5m from one of her business bank accounts to her personal bank account to buy her Personal Travel Allowance for the journey.
“The next day being the 8th of June, she wanted to refund a customer who had been debited twice while using her bank’s Point of Sale machine during the Lagos Leather Fair held the weekend before. She typed in her bank’s mobile app password and got an error message, saying the credentials she had put in were invalid. She tried it the second time and it said the same thing.
Immediately, she called the customer service number, explaining to the woman who picked the call what was going on. She was then told to reactivate her app. She did just that and the app requested for her PIN. She typed in her PIN and it said it was invalid again.
Umoh said she explained this to the customer service representative who was still on the call with her and she advised that she should visit the bank. She could do this the same day as it was almost 4pm.
Less than five minutes after the call, she started received text messages of debit alerts from her bank on strange names. Immediately, it occurred to her that her account had been hacked into. She quickly called the customer service, while rushing to the bank.
She was at the bank when the debit alerts of the money being withdrawn were still buzzing and she screamed at the customer service lady that all her money was gone and that her account should be blocked at once. Her account had been cleared of approximately N2.1m within 30 minutes.
Since June, she said she had been going back and forth with the bank over this issue.
In July, the bank succeeded in recovering and refunding N668,000. However, the story of her life and business venture has never remained the same. She is currently in court with the bank over the issue.
Some weeks ago, writing on how the sad incident had affected her life, Umoh stated, “Just about three weeks ago, I decided to wake up from my depression. I got myself back after the advice and encouragement from my dear friends and few customers who were aware of the unfortunate incident. …Here I am, barely starting a business and already in court fighting with a bank. I would appreciate anyone who has ideas on how the SMEs like mine can be saved from total collapse after going through such a shock and setback.”
Umoh’s case is similar to Mrs. Comfort Ashaye, a pensioner who lost her entire savings of N572,000 to fraudsters. Her pension had been paid into her Diamond Bank account.
CBN Governor, Mr. Godwin Emefiele
On March 28, 2017, the total pension was withdrawn overnight by fraudsters, said Sola Salako of the Consumer Advocacy Foundation of Nigeria.
Ashaye was said to have gone to her bank branch, opposite Motorways Plaza in the Toll Gate area of Ikeja, Lagos but she got no refund.
An Abuja-based business woman, Ada Ann, also lamented how fraudsters defrauded her of a total of N4.2m after gaining access into her bank account.
The young nursing mother, who runs a boutique called ‘A Cube Boutique’, had been swindled in 2014 and all efforts to recover the money have not been successful.
“Bad things are not supposed to happen to good people, right? Yes, but my case is unfortunately different. I am asking why this kind of fate should befall me now, losing all the savings I ever worked for,” Ann said.
For a number of Nigerians, electronic or online banking is bad luck that should not have come their way in life.
As a matter of fact, the pain and anguish the activities of fraudsters have inflicted on innocent and ignorant customers have come to raise the question of whether e-banking is a blessing or curse to the financial services industry.
Findings have shown that many bank customers are ignorant of electronic fraudsters’ antics.
Experts say Nigerian banks are not doing enough in the area of enlightenment of customers on e-fraud.
Most banks appear not bothered because more fraud cases have been linked to the negligence of the customers.
However, there have been cases of insider collusion in some of the fraud cases. These are a number of cases of compromise on the part of the customers in terms of their banking details.
According to experts, the swift expansion of computer, mobile and Internet technologies has made new forms of worldwide crimes known as electronic fraud/cybercrimes to evolve. Over a period of time, the nature and pattern of cybercrime incidents have become more sophisticated and complex.
Financial technology experts say banks and financial institutions remain the unabated targets of cybercriminals in the last decade. E-fraud is now seen as a business risk rather than a technical risk.
Financial gain is still the major motivation behind most cybercriminal activities and there is little chance of this changing in the near future.
Cybercrime is simply defined as an economic offence committed using the computer and Internet as a medium, source, instrument, target, or place of a crime.
Some of the various trends in cybercrimes, according to experts, are social engineering (phishing, smishing, vishing, DDOS, spam), SIM swap, card/ATM fraud, online/wed fraud, and mobile payment/ USSD fraud.
The various fraud cases narrated earlier involve payment cards, the USSD (using telephone lines of customers), and the ATM-related fraud.
The Nigerian Inter-Bank Settlement System Industry Fraud Report showed that the banking industry recorded 6, 212 fraud cases during the second quarter of this year.
Within the period, the actual loss count was 3, 211 while the actual loss value was put at N501m. The report put the attempted fraud value at N791m.
The report read in part, “The Q2 2017 has a fraud volume of 6, 212 which depicts a 17 per cent increase when compared to Q1 2017 and Q2 2016.
“Out of the 6,212 fraud count for Q2, the industry recorded 3,211 as count for complete or partial loss in volume. This indicates that the industry was able to save about 48 per cent of the attempted fraud volume.
Umoh, who was defrauded of N2.1m by electronic fraudsters, is worried that the Central Bank of Nigeria and banks cannot investigate the case.
The issue of the USSD-related fraud (fraud involving using customers’ phone number which has been linked to their bank account) is becoming rampant.
As a result, the CBN is working on collaboration with the Nigerian Communications Commission to develop a legal framework that will enable Deposit Money Banks and telecommunications companies to ban owners of any bank account or Global System for Mobile Communications line traced to fraud.
According to the officials of the CBN and the Nigeria Deposit Insurance Corporation, the development follows the increase in the rate of electronic fraud involving (USSD banking) telephone lines and Internet banking transfers.
They said that regulators in the banking and telecommunications sectors were set to finalise work on a plan to deal with perpetrators of fraud within the banking and telecoms industries.
They added that any bank account or GSM line linked to any fraud especially electronic fraud would be banned for life.
Findings show that some big banks in Nigeria are secretly refunding customers who are victims of e-fraud in order to avoid damage to their reputation.
Other banks, which do not have robust bottom line to do this, are said to be bearing the brunt of customers taking the issue to the social and traditional media.
The Chief Compliance Officer, Access Bank Plc, Mr. Pattison Boleigha, speaking on the topic, ‘’Cybercrime: Nature and trends’’, recently, said there was a need for more synergy among stakeholders in order to mitigate fraud.
Boleigha, who was represented at the forum by Shola Akinnukawe, listed the effects of fraud to the bank sector as financial loss, reputational damage, loss of customer loyalty, fines and withdrawal of licence.”
He, however, said Nigerian banks were increasingly being formidable to fraudsters due to their various layers of internal control system.
The Managing Director, NIBSS, Mr. Ayo Shonubi, says fraud rate in Nigeria is increasing because the volume and value of transactions migrating to the electronic space is huge.
Shonubi, therefore, says that the fraud rate increase is minimal considering the huge volume of transactions migrating to the electronic space.
The Director, Banking and Payment System, CBN, Mr. Dipo Fatokun, who is also the chairman of the Nigeria Electronic Fraud Forum, says the regulator in partnership with the Bankers Committee has established NeFF to ensure that banks keep on collaborating to nip in the bud the activities of fraudsters.
The Chairman, Committee of Electronic Banking Industry Heads, the umbrella body for the heads of e-banking across the commercial banks in the country, Mr. Dele Adeyinka, says the banking industry has realised that there is a need for massive campaign to educate bank customers on e-payment fraud.
Adeyinka says, “Six months ago, mid 2017, we in the banking industry realised that we needed to set aside some amount running into hundreds of millions of naira to create awareness about electronic fraud. We decided that an X amount of all the transactions going on the NIBSS platform be set aside for this. In other words, a fraction of the value of all the transactions going through the NIBSS platform will be set aside for this.
“Therefore, in January 2018, we will begin the massive campaign across all channels, social media, radio, television and print media. We are going all the way and we won’t stop once we start because it is going to be on a sustainable manner. This is also in line with the regulator’s plan to resume cashless Nigeria policy next year.”
According the CeBIH chairman, who is also the head of electronic banking at Wema Bank, Neff, CeBIH and NIBSS are working to ensure that fraud cases reduce to the minimum.
On the need to create a customer protection fund to assist victims of electronic fraud, Adeyinka says issues such as Charge Back Process are being looked into closely to ensure that victims of e-fraud get the refund as and when due.
He, however, notes that customers who are found to have compromised her banking details may not get such reward, adding that liability shift policy will take its course in such circumstances. Liability shift means any party found to have compromised in a fraud case will bear the liability of the fraud, whether the bank, switch company or customer.
The Managing Director, PFS, Dr. Yele Okeremi, says e-payment has made banking easier, noting that banking would not have been made comfortable the way it is today without it.
According to him, the industry will continue to make efforts to address issue of fraud to make the sector better.
The President, Institute of Chartered Accountants of Nigeria, Mr. Chidi Ajaegbu, says the CBN has achieved a lot in the cashless drive but there is a need to continue to build public confidence in the electronic system of payment.
He says, “If we are striving to become a 24-hour economy, then we must have the necessary controls in place to build people’s confidence in the cashless policy we are driving. And part of this is making sure that people believe that their liquid assets and details are secure. It is the key to the 24-hour economy we are driving towards.
“What they do in other jurisdictions is that when they notice any perceived infraction, they descend on it heavily. And I think this is one of the things we need to adopt here. We should let people know that you can do every other thing but we can’t let you mess around with our cashless system. It is going to go a long way to help our economy.”
The Chairman, House Committee on Banking, Insurance and Actuarial Matters, Mr. Olufemi Fakeye, says he does not use debit or credit card in Nigeria as a matter of personal principle, adding that he only uses them abroad
Fakeye says this principle stems from the fact the banking sector in the country is vulnerable to some threats.
The lawmaker recalls how the principle helped him when some fraudsters hacked into his account and made away with some millions.
He wrote to the bank and showed proofs that he had never used any ATM card in the banking sector. The bank in questions, he says, has no choice but to refund his stolen funds.
On the issue of insider-related e-fraud, a former Chairman of the Chartered Institute of Bankers of Nigeria, Mr, Abolade Agbola, says banks have a lot to do to protect the electronic payment system.
He stresses the need for banks to come up with measures to mitigate insider-related e-fraud cases.
Agbola says, “Well, unfortunately, we are living in a society which we created for ourselves. The issue of integrity and all the rest in Nigeria is the real cause of all these frauds. In those days, when people went into banking, they made a career of it. But today, when you go into any job, they want to make money because their counterpart who has become a local government chairman or a politician is doing fine compared with them that are working 24 hours in the bank.
“Until we define the value system of our nation from the highest office down, we’ll continue to have fraud. Nigerians are the people working in the banks doing all these frauds. We are living in a nation we have created for ourselves and that is why integrity should be the watchword, followed by professionalism and ethics.”
He adds, “And that is why the CIBN is trying to ensure that anybody who wants to be a banker is a professional who can be tracked; who has allegiance to the profession; who wants to maintain integrity. When the banking boom came, all sort of people came into banking – lawyers, doctors, engineers – who have no business in banking. And to me, it’s worrisome the amount of money that people steal through electronic fraud. The banks are trying to build security around all these devices. Definitely, the greatest security is the people, and the society reflects the people. I think we need to find a way to cleanse our society. There is no justification for it, and what that would do is that people would limit the amount of money or specify the kind of account they expose to online money transaction.”
The CIBN chairman also states, “And I think the CBN is insisting that when this issue has happened, it must be resolved speedily so that confidence will not be lost. And that is one of the reasons why banks will keep on changing their software to make it safer and, of course, that is also one of the reasons the issue of National Identity Card needs to be fast-tracked, which is at the government level.
“We must have an identity card that identifies the human being with the face, and which will guide every transaction in the society. And that is why the political will to do that must also be there. Every fraud can be traced because the greatest way to check fraud is to know that you can be caught and the system has a lot of checks either through your finger or your face or your contact address. When you see the fraud that happens and the trillions of transactions that take place daily, then I think the banks have to take the technology ahead, then take the staffing ahead and create a future for the employees so that they can know that they have a future in the organisation; and that they can build the future. This is because people commit fraud when they have short-term view of the future.”
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