Azuka said he was finding it difficult to feed his family of four after the incident. “I was told by my bank that it was my mistake. My account officer accused me of exposing my password and token to a third party. But, that is not correct. No one had access to these details. Banking for me, is no longer safe,” he disclosed.
Some other customers have relived their experiences and frustration with the e-payment channels.
Martins Chukwu, an entrepreneur, said he had no premonition he would lose N120, 000 to fraudsters on a particular Saturday, when a customer bought N120, 000 worth of goods from him. The customer, who pleaded that he had no cash, had requested for his account details to transfer the money.
Chukwu said: “He typed the number on his phone and within few minutes, I got transfer notification alert from my bank. The alert showed that N120, 000 had been credited to my account. So, he took the goods and went away.
“The next working day, which was Monday, I went to the bank to withdraw the money but it was not there. My account officer showed me my last transaction detail and said that the alert I got did not come from the bank and that it was a fraud. That was how I lost the money and all efforts to trace the fraudster failed.”
Chukwu released the goods because the alert showed his previous account balance and the new deposit by the customer. That, he said, was an indication that the fraudster collaborated with an insider from the bank.
“Up till today, I have not recovered that money,” he told The Nation. That devastating experience, Chukwu noted, has made him to always insist on cash payment no matter his closeness to customers.
Knocks for e-transaction
channels
Despite the arguments in favour of the cashless policy, there are also customers that have completely abandoned the use of e-payment channels for insecurity reasons.
The Managing Director, Parkings Limited, Emeka Chime, falls into this category. He said: “I don’t use ATM card. I make my transactions through cheques and withdrawal booklets. It is quicker and less-stressful. Poor network quality remains a major issue that reduces my confidence in cashless banking. Sometimes, you go there, slot in your card and nothing comes out but your account is debited.”
However, the Managing Director, Magnificent Ventures Limited, Celestine Enemuo, described the evolving cash-less policy as good, even as he blamed the skepticism on commercial banks and the CBN.
According to him, the institutions have not created enough awareness and the right infrastructure for the project to succeed. He said many bank customers have to be adequately educated on the need to keep their passwords secret.
Analysts said banks are desperately seeking profits even at the expense of customers. Majority of the banks, The Nation learnt, are grappling with low capital bases and depressed income margins. Poor cash flow due to huge investments in power sector projects and tough regulatory policies are depleting banks’ revenue margins.
Experts speak
The Chief Executive Officer (CEO) of Forenovate Technologies Ltd, Don Okereke, said cyber criminals use skimming and trapping devices to steal credit or debit card details without the knowledge of account owners. He said there have been cases of online account takeover, where an unauthorised party gains access to an existing account by stealing the access codes and conducting illegal funds transfer to a designated account.
Okereke said: “In today’s increasingly-connected world, convenience, speed, technology adoption and payment options allow people and businesses to conduct online financial transactions with ease.
“Fraudsters are taking advantage of this trend to fleece customers of their funds. A leading bank has been bragging of its capacity to open instant bank accounts via Facebook and even approve loans online. I advise banks not to sacrifice security and safety of their customers for speed.”
Besides, Okereke said that some bank customers are yet to get accustomed to the dictates of cashless banking and all the issues associated with it.
He said that some discerning and security-conscious Nigerians deliberately avoid the policy because of the inherent loopholes. Many of these customers, he added, lost confidence in their banks after many reported fraud cases.
Former Country Manager, IBM West Africa, Taiwo Otiti, said the rising cases of e-fraud prompted global payment companies like Visa and MasterCard to raise the standard of technology deployed in the country.
Otiti said: “The standard for Visa in Nigeria is the strictest in the payment system worldwide. Visa stipulates a very, very high standard for Nigeria. We have seen syndicates collude with internal staff of banks to transfer funds to fraudulent accounts. The easiest way is to get a normal card, open an account and get someone internally to transfer funds into the account. The funds are withdrawn mainly through the ATMs.”
Otiti, who is now General Manager at Central Securities Clearing System Plc, explained that in other cases, online fraudsters could compromise a customer’s account by demanding his token.
“They can send you a mail asking you to generate a token, and it will be unwise for you to oblige them. Remember, each time you generate a token, the system in the bank waits for further instruction that will come either from the fraudster, or from you,” he warned.
Otiti said that securing customers’ transactions require the collaboration of the account owners and the lenders. “When customers give fraudsters access to their accounts, by revealing their secret codes, they lose their money. But there have also been issues of insider-collusion, where bank officials collude with fraudsters to defraud the customers,” he said.
Otiti, however, said that banks can invest heavily in technology to stop fraud, but regretted that many of the lenders do not want to make such investments.
He said: “There are technologies that can help banks fight frauds better. But many of them have refused to invest in key technology. We have to remind them that banking thrives on trust and security which every serious lender should provide.”
CBN’s position
CBN’s Director in charge of Banking Payment Systems ‘Dipo Fatokun said the introduction of chip-and-Personal Identification Number (PIN) cards have led to drastic drop in ATM card fraud. He said the apex bank and other relevant institutions have been able to reduce frauds considerably by instituting ATM Fraud Prevention Group and the Nigeria Electronic Fraud Forum (NeFF). The groups, he explained, were formed by the banks to collaboratively share data on fraud attempts and proactively tackle them.
According to Fatokun, the CBN has instructed banks to set and enforce the mandatory daily withdrawal limits for ATM users, while other related transactions, including PoS and web purchases are subjected to stringent limits as agreed and documented between the banks and their customers.
Data from the CBN showed that although e-fraud rate in terms of value dropped by 63 per cent last year, after the BVN introduction and improved collaboration among banks via the fraud desks, the total fraud volume rose significantly by 683 per cent within the year compared to 2014 figures.
Also, the Nigeria experienced a total of 3,500 cyber-attacks with 70 per cent success rate and loss of $450 million within the last one year mainly through cross channel fraud, data theft, e-mail spooling, phishing, shoulder surfing and underground websites.
Fatokun explained that one common thing about electronic fraud was that when money is moved fraudulently from one account to another, it could easily be traced.
“And so, identifying the owner of that fraudulent bank account using the BVN, will not only be able to identify him or her in the bank he has moved the money to, we also identify him in all the banks where he has accounts.
“And when legal impediments are overcome, such people could be blacklisted, or watch-listed in the banking system. That will also assist us to a great deal, in curbing the menace of fraudsters,” he said.
The CBN director, who spoke on the theme: “Exploring new protective measures against social engineering vulnerabilities”, said social engineering has common phenomenon in cybercrime attacks in Nigeria.
“Almost on a daily basis, a plethora of messages are sent by these criminals with the express intent to con the unsuspecting recipient using techniques that appeal to vanity, greed or authority. It is, therefore, important that we look critically at measures that will protect the industry as a whole from the menace of social engineering attacks.
“It is often said that people, processes and technology are the tripod on which cybersecurity lies, with discussion ever hovering on which is the weakest link. I must however submit that like what is required in building any chain, we must prepare to forge each link with the same degree of heat – in other words, no link must be too important or less significant in the pursuit of payments security.”
On the implications of such blacklisting on customers, he explained that for commercial banks, opening an account or having a bank account itself is a contract.
Fatokun: “It is a contract between a willing customer and a willing bank. So, if a bank notices that a particular customer is fraudulent, or is a criminal, the bank has the right to get out of the contract.
“And another implication is that if an account is watch-listed, if there is a credit into that account and every other person is having his credit within two to three minutes, because the account has been watch-listed based on past activities, credit into such account may be withheld for a longer period while investigations are carried on to actually confirm that it is a genuine transfer.”
These steps, Fatokun said, would assist the banks, because being able to identify, apprehend and prosecute would go a long way in reducing the problem of electronic fraud.
On prosecution and apprehension, he said the NeFF is working with the Police to create a dedicated e-Payment and Card Crime Unit, which when operational, would help reduce further, e-fraud.
He said the operationalisation of a dedicated e-Payment and Card Crime Unit in the Nigeria Police will enable a greater effort in NeFF’s quest to successfully investigate and bring to book through effective and efficient prosecution of cyber-criminals.
The CBN has also directed banks to establish a database of their customers identified through their BVNs to be involved in confirmed fraudulent activities.
Besides, the CBN established the Consumer Protection Department (CPD) in April 2012 in furtherance of one of its core mandates to “promote a sound financial system in Nigeria as enshrined in the CBN Act 2007.
The unit is expected to resolve consumer complaints against financial institutions under the purview of the CBN within two weeks. However, complaints on excess charges and loans must be resolved within 30 days. But not a few customers are unhappy that many of the e-fraud cases linger for years without resolution.
It was also in 2012 that the CBN introduced the cash-less policy to ease payment difficulties and promote the use of ATMs, decongest the banking halls and encourage PoS transactions, promote web payment and online transfers as well as mobile banking transactions.
Also speaking, President, Chartered Financial Accountants (CFA) society, Banji Fehintola, said that banking thrives on trust and such trust must be sustained by bankers at all times.
He said: “If the people who have the capital do not believe that you have the competence and professionalism to invest or keep their money in a proper way, then there is a problem. And that is the reason why ethics is very important.”
Fehintola described fraud in the banking sector as an indication of decadence.
He said: “Fraud by any standard is misconduct, by professionals. As a banker, you have fiduciary duties to build trust with the depositors, because they bring money to you because they trust you. If you misplace that trust, the banking industry suffers and the economy begins to suffer.
“Technology has moved on. Banking has moved to mobile phones. I personally haven’t been to the banking hall in months. I do all my banking through my phone. But technology has its own ills. The case of Mrs. Umoh is an example of where technology can also have problems.”
“Obviously, fraudulent people will always find their way around technological apps and try to breach the controls for their own benefits. My hope is that if people understand the value of being ethical, being fraudulent or manipulating technology to defraud will not even cross their minds. If that happens, then we have an industry that thrives on trust.”
Fehintola noted that fraud in the banking industry will continue because ‘people will always be people’.
Mrs. Umoh’s passionate appeal for justice was heartbreaking. She said: “There is need for justice for victims of online fraud who are equally oppressed by banks, because they seem so little and powerless against the huge corporate might of these banks.
“I demand for justice in relation to Diamond Bank, for all that I have laboured for, which have been unfairly taken from me through one of its services, for which it is avoiding to take responsibility. I demand justice for the shoddy and non-cooperative way in which I have been treated by the bank thus far.”
But the question on the lips of many is will Mrs. Umoh and other bank customers who have suffered in the hands of banks’ fraudsters ever get justice? Only time will tell.
