The rising cases of fraudulent bank alerts are currently unsettling operators in Nigeria’s financial landscape as more citizens fall prey while the scammers smile to the banks daily.
The crime involves the use of Short Message Service (SMS) disguised as a transaction alert from banks to defraud unsuspecting victims, especially small scale traders and Point of Sale (PoS) operators
According to The Guardian’s findings, there are certain Apps criminals use to perpetrate the crime. These include Flash Fund App, Lofty SMS App, Money Prank Pro, Millionaire Fake Bank Account as well as Pro and fake alert maker for Android.
Unfortunately for the victims, a regulatory intervention may not come quickly as the Central Bank of Nigeria (CBN) told The Guardian, yesterday, that its regulatory functions did not cover fake financial transactions.
The Director, Corporate Communications of the CBN, Dr. AbdulMumini Isa, who stated this while reacting to the increasing cases of fake bank alerts, explained that while such act is condemnable, the bankers’ bank does not regulate issues and practices that lie outside of the banking arena.
“Well, this type of incidence is unfortunate but the CBN does not regulate such incident. The act does not lie within the banking system. It is within the Telco firms and the Nigeria Communications Commission (NCC), which regulates the telecommunication industry.”
However, a source in the Federal Ministry of Communications and Digital Economy said the NCC would soon collaborate with the apex bank to introduce a scheme that would enable banks and telecommunications companies to freeze any bank account or block mobile phone line traced to fraudulent transactions. The source said the NCC would also work with the Nigeria Deposit Insurance Corporation (NDIC) on the spate of electronic fraud involving Unstructured Supplementary Service Data (USSD) telephone lines and Internet banking transfers.
Fake credit alerts, one of the growing ways criminals now defraud business owners, have become very rampant in many parts of the country. For established and budding entrepreneurs, the phenomenon is proving to be a threat to their investments. Many Point of Sale (PoS) operators have become victims of the fraudulent act in recent times.
From Lagos to Kano, Abuja, Ondo, Kaduna and Akwa Ibom, among others, the story is the same. It has been lamentations from individuals and businesses, especially Small and Medium Enterprises (SMEs) that have fallen prey to this rising menace.
Narrating her ordeal, a Lagos based PoS operator, Mrs. Bimpe Oladele, said the fraudsters swindled her mum and sister.
“They came to the shop disguised as workers working in a site behind our house, unknown to my mum and sister that they were thieves. They perfected their plan to the extent that they even wore clothes of people working in a construction site to deceive people that they were working in a site. They requested withdrawal of N30, 000 and did a transfer. My sister called to inform me that a transfer of N30, 000 had been made to my account but I told her I had yet to receive the transfer. I also checked my mobile app and found out that it was the same. I told her not to give them the money yet but I overheard them mounting pressure on my mum and sister,’’ Oladele recalled.
According to her, it got to a time that her sister and mum could no longer bear the pressure from the swindlers who claimed that the bank had debited them. “The pressure became much after they showed them a fake debit alert, which conformed with every necessary detail. My sister and my mum gave in to the pressure and gave them the money,” she said.
Oladele thought she would receive the money on getting home, but when she didn’t get it, she concluded that she had been defrauded. “When I got home, I already observed the way the issue was going and I hadn’t received the money in my account. I waited till the end of the day and it was still the same thing. They fleeced us and even dropped an android phone as collateral. The phone was discovered to be a useless piece of item,” she added.
Another PoS operator, Mrs. Ngozi Obinna, has also been swindled through fake credit alerts. She explained that she had suffered scams at different times via fake credit alerts despite not making much profit from the business. The mother of four recalled that in one of the incidents, it was her child who fell victim to the antics of the fraudsters while at the shop to help her.
“The first one happened about two months ago. I wasn’t around and my son was in the shop. A customer came and he attended to him. The customer was given N30,400 and transferred the money to our account as they claimed. I had warned them never to give anyone money without receiving a credit alert. He gave the man the money after he received the alert. My name and every other detail showed on the alert, so he gave him the money. It was when I got home that I found out that the money didn’t reflect in my account and the so-called alert was faked,” she narrated.
Obinna said she was pained particularly because she didn’t even make as much profit as N20, 000 in a day.
While it may be difficult to get a substantial amount that might have been lost to this menace, a report by FITC revealed that bank customers in Nigeria lost N472 million to fraud in the first quarter of 2023. It also disclosed that there were a total of 12,553 cases of fraud recorded within this period.
FITC, which evaluated the channels and instruments used in fraudulent activities, listed them as ATMs, web and mobile banking platforms, bank branches and PoS terminals, among others.
FITC’s institutional members are also members of the Nigerian Banker’s Committee, which comprises the CBN, NDIC and all licensed banks in Nigeria.
In terms of the total amount lost to fraud in Q1 2023, mobile fraud accounted for 34.07 per cent at N161 million, followed by computer/web fraud at N130 million (27.69 per cent) and fraudulent withdrawals accounting for 24.72 per cent at N116 million.
A peep into the activities for Q4 2022 revealed that mobile fraud ranked highest, accounting for N1.1 billion (42.72 per cent of the total), followed by computer/web fraud at N646 million (24.99 per cent), PoS fraud at N450 million (17.41 per cent) and fraudulent withdrawals at N139 million (5.36 per cent).
In both quarters, staff involvement in these fraud cases showed a worrying trend. The report identified 72 cases of employee involvement in fraud in Q1 2023, an increase of 89.47 per cent from 38 cases in Q4 2022.
While the FITC report suggests a positive overall decline in fraud cases and amounts involved, the increasing trend in staff involvement and the rising number of PoS-related fraud cases indicate areas that need further attention and stronger preventive measures.
This is even as analysts believe that if technology continues its current advance, this scam might wipe off the gains of the cashless policy as most business owners may insist on cash only in sales.
A telecoms expert, Kehinde Aluko, advised that to tackle fake alerts, suppliers would have to check their balance with their banks and not depend on the SMS alerts they usually receive on their cellphones.
According to Aluko, fake alerts are mostly done through websites designed by fraudsters. He stressed that suppliers should check their bank apps before releasing their goods and services.
The Nigeria Inter-Bank Settlement System Plc (NIBSS), which in one of its recent reports claimed that Nigerians lost over N5 billion to fraudsters, said there was need to check out for misspellings.
“Check the credit alert you received if it contains your bank. The real bank alert will show you how much you had before the alert and after the alert; have a precise knowledge of how much was in your account. If you get an email alert, check the email source and ensure it comes from your bank’s official account and check the authenticity of the mobile app used.”
Fake bank alerts scam is not entirely new but it is growing in scope, leaving huge losses in its wake. About three years back, there was a story of one Michael Thompson Williams, a 28-year-old medical doctor who bought a Porsche car worth N28 million with fake bank alert. Also in Sapele, Delta State, there was a report of a young man who bought a Hisense 32″ LED TV from a shop with fake bank alert.
On why there is a surge in the crime in the country lately, the Chairman, Mobile Software Nigeria, Dr. Chris Uwaje, told The Guardian that the world is currently overwhelmed by information ‘overload’, which has led to national and global data-chaos.
“And it seems we haven’t seen nothing yet! With the advent of Artificial Intelligence (AI) and Robotics, the challenges of information overload and data-chaos are going to magnify,” he stated.
Uwaje, who said reasons for the above obligations were twofold, explained further: “First, the global Information Infrastructure Superhighway (codenamed the ‘Internet’) is undergoing infrastructural retooling state. The ubiquitous nature of that digital infrastructure has reconditioned data and information into another super-connector and information storage space codenamed the cloud.
“The ambiguous nature of the challenge is further magnified by the fact that there are shortage of up-to-date digital skills to respond to the magnitude of the challenge. And that points to the more reasonable strategy of porting critical information into supercomputer otherwise known as Quantum Computing processes to reduce the risks in digital transformation. But that in itself is empowering AI to take control of our life interpreted as data and information.
“Second, we must invest massively in digital research. And note that the traditional layer of the organised digital ‘addressing’ structure and inter-networking layers held-together and driven by the Internet Protocol version 4 (IPv4) is approaching its end-of-life status. To reduce our digitisation vulnerabilities, we need to urgently migrate to Internet Protocol version six (IPv6). This, amongst others, include but not limited to the following: the vulnerabilities observed in the ease of multiple slicing and sharing of network traffic addresses under IPv4. It’s a hollow dream to think that we can achieve a 5G-centric smart city initiative with an IPv4-NAT solution. And we must remember that 6G is currently loading in the R&D labs.”
According to him, the consequences of late arrival of data protection regulations around the world; powers of proprietary software (Applications and Databases); weak antitrust regulatory issues in developing/consumer nations such as Nigeria and the global pressure of population growth and digital ignorance of leaders in underdeveloped nations have negatively redirected the attitude of new digital generations mostly made up of the youth and magnified the problems.
Uwaje stated that going forward, the government should consider and implement massive local content digital mind-reconditioning initiative, as a sociological intervention to recover and retool freelance cyber hackers into employable ethical hackers.
Meanwhile, the police are already aware of the menace and have vowed to clamp down on the perpetrators.
Last Saturday, the Rivers State Police Command paraded one Precious Frank who specialised in defrauding PoS operators in Port Harcourt City Local Council and environs using fake bank alerts.
The Commissioner of Police, Emake Nwonyi, while parading Frank alongside other suspects at the command’s headquarters, said luck ran against the suspect after a victim, Wale Alabi, laid a complaint to the Borikiri Police Division that the suspect swindled him of N100, 000 with a fake transfer.
“On receiving the complaint, a thorough and diligent investigation was carried out, which led to the arrest of the suspect and the unravelling of the techniques adopted by fraudsters to defraud the unsuspecting victims,” the CP said.
Nwonyi said the suspect had given detailed information that would lead to the arrest of other members of the gang in the state, adding that pragmatic efforts were being made to curb the crime.