A report by the FITC has revealed that bank customers in Nigeria lost a total of N2.72 billion to fraud during the first and second quarters of 2022. The report, obtained by our correspondent from the FITC website, indicated that there were 67,878 cases of fraud recorded within this period. FITC’s institutional members include the Nigerian Banker’s Committee, which comprises the Central Bank of Nigeria, the Nigeria Deposit Insurance Corporation, and all licensed banks in the country.
Notably, the data showed a decline in the number of fraud cases across banks compared to the first quarter of 2022. In the second quarter, a total of 27,356 incidents of fraud and forgeries were reported, down from 40,522 cases in the first quarter, representing a 32.49 percent decrease. Additionally, the total amount involved in fraud cases decreased by 40.05 percent, from N14.65 billion in Q1 2022 to N8.78 billion in Q2 2022. Similarly, the total amount lost due to fraud incidents saw a slight decrease of 23.66 percent, dropping from N1.54 billion in the first quarter to N1.17 billion in the second quarter.
The report highlighted that mobile fraud, which includes fraudulent activities conducted through USSD transactions, had the highest occurrence, followed by computer/web fraud and POS fraud. Specifically, mobile fraud accounted for 38.18 percent of the total losses, amounting to N449 million, while miscellaneous and other types of fraud accounted for 32.19 percent (N379 million) and suppression of entries for 11.02 percent (N129.64 million). A closer examination of the unusual amounts recorded under miscellaneous fraud revealed that these incidents were carried out via E-naira, for which the banks were held liable.
Regarding the returns by payment channel, the analysis indicated a decrease in the amount lost to fraud via web, ATM, and PoS channels. The amount lost through the web channel decreased significantly from N1.07 billion to N98.4 million, while losses via the ATM channel fell from N43 million to N5.9 million. Conversely, there was an increase in losses through bank branches and mobile fraud channels, with losses rising from N103.45 million to N618.24 million (a 497.56 percent increase) and from N270.92 million to N449.03 million (a 65.74 percent increase).
The FITC emphasized the necessity for banks to strengthen their internal control measures to enhance efficiency in preempting and ultimately preventing fraud activities. Recently, it was reported that at least 6,047 Bank Verification Numbers of bank customers have been placed under the CBN watchlist due to fraudulent transactions. According to the Nigeria Interbank Settlement System, Nigeria boasts one of the most advanced electronic payment capabilities globally. However, the increase in transaction processing speed and available channels has also created opportunities for fraudulent transactions to flourish. In its report, “NIBSS Insight: Fraud in the Nigeria Financial Services,” it stated that even a one percent successful fraud rate could lead to 100,000 successful fraudulent transactions daily. This situation could directly impact customer confidence in the entire system and significantly affect the financial inclusion drive as well as the CBN’s cashless policy.
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