Bankers are conniving with criminals to defraud customers. Every Nigerian should be worried

On Wednesday, March 24, my mother went to the bank for the first time to open an account. Before she left, I told her about bank fraudsters who would call or send a message out of the blues asking for sensitive information that can be used to later defraud her. I warned her not to respond to any text messages or give out any information over the phone. I advised her to go to the bank anytime she has issues with her account.

A few days later, she went to the bank to pick up her ATM. Just one hour after she got home, she received a call from an anonymous person who claimed to be calling from the bank. The person told her he was calling from the bank to help her fix a problem with the ATM card she just picked up. To convince her he was actually calling from her bank, he called out her full name and accurate date of birth before asking her to read out the 16 digits on her card, the expiry date just below the 16 digits and “the three tiny digits at the back of the card” so he can help “activate it for transaction.”

My earlier warning prevented her from disclosing this information before she disconnected the call and told me about it. She was lucky but not many others have been so fortunate.

Sarah Nduka told Neusroom that she opened an account at a branch in Benin shortly after leaving secondary school in 2019 and saved N60,000 in it. A few days later, “someone from her bank” called to inform her there was a disparity between the name on her ID card and the one she provided to the bank when she filled the form. The caller asked her to provide all the information on her debit card to confirm she was really the owner of the account which she did. Shortly after that, she got a series of debit alerts and her account was cleared of her money.

“I rushed to the bank that afternoon to cause a scene. I told them to their face that they were responsible for my missing money. How else could someone have known that I have just opened an account if not those in the bank? They said it was my fault for disclosing my card details to someone over the phone. It wasn’t like they told me no to do so before.”

Nigerian E-fraud

The Central Bank of Nigeria implemented a nation-wide cashless policy in 2014 to drive Nigeria’s formal economy and reduce the huge cash in circulation. This effectively encouraged more persons to move financial activities to the banking sector. While this has allowed the CBN to implement financial policies that have resulted in noticeable gains, for example, the reduction of the risk involved in the handling of physical cash, the other side is that it has opened a new method of banking fraud.

The Nigeria Inter-Bank Settlement System’s report for Q3 of 2020 shows that electronic fraud had a 534% increase compared to the same period of 2019. This represented a loss of N3.5 billion. This number is expected to rise. As more and more people move their informal financial transactions to banks and commit their savings to the formal sector, it will open up more doors for electronic banking fraud to take place.

The fraudulent activities take different forms: Phishing which is a form of cybercrime where the perpetrators lure the victims into revealing sensitive data about themselves usually by email. There are also the ones involving harvesting information on a credit card and using the details to make financial transactions online. Some of the merchants do not need input of credit card pin and only require the information present on the card.

Fraudsters are also getting smarter by leaving little to no trail to evade detection and arrest.

First time bank customers

There is an observable pattern in the kind of victims who fall prey to bank scams and a sizable number of them are new bank customers. Neusroom sent an email to all major banks in Nigeria to get a statistics of the number of new bank customers who have reported attempted fraud or have been victims of frauds but none provided the requested information.

What is however observed is that a substantial number of new bank customers who are either fresh secondary school graduates or older people are usually targeted because they are perceived as naïve or inexperienced in the methods used by these fraudsters. Neusroom spoke with 10 people who have experienced electronic banking fraud and eight of them said it happened when they just opened an account. A banker in Lagos, Ese (last name withdrawn because she was not authorised to speak with Neusroom), confirmed that new accounts were susceptible to electronic fraud and most of their complainants who were either victims or were fortunate not to lose their money were people who just opened an account for the first time and did not know how the system worked yet. So why are new account holders targets of electronic bank fraud?

Internal collaboration

According to the NIBSS report for 2020, approximately 39% of frauds are perpetrated by external parties while 37% are perpetrated by internal parties. While the ones involving internal parties may seem lower when compared to ones perpetrated by external parties, it is significantly worrying that about one third of all electronic frauds have the participation of those who are supposed to help protect customers’ money.

Adesoji Adetunji whom Neusroom connected with on Twitter said after complaining to his bank that he had problem with using his credit card at the ATM, he received a Whatsapp message from someone who claimed to be from the bank shortly after asking him to send his card details. When he did, all the money in his account was used to pay for goods on a popular Chinese e-store.

If bank staff and workers play a small but significant role in electronic fraud, it seems then that the reason new bank holders are targeted for fraud is because someone is sending their information to fraudsters.

Ese also thinks that some bankers may be involved in providing vital information of customers to fraudsters but feels banks have put measures in place to prevent such from happening.

The Banks have rules and guidelines for each staff to comply with and various sanctions with various degrees of punishment. Fraud is outright dismissal with the staff blacklisted by CBN. ‘‘They will not be able to work in any financial institution ever again,” She added that there are two levels of authorisation so that when someone initiates a transaction, approval will come from another staff member. That way, one person serves as a check and balance to another.

“Banks also monitor the digital footprint of our activities on the backlog. If a customer comes to report any attempted or successful fraud on their account, the bank will do its investigation and one of the things they would check is the last set of people to access the complainant’s account. Then they would find out why the account was accessed and also verify it through other evidence like CCTV footage, stamped tellers, etc. Any staff who is unable to provide tangible reasons will face further investigation and if found guilty, will face the laid down punishment.”

Another banker, Adenowo, told Neusroom it will be difficult to eradicate fraud. He also confirmed that criminal bank staff can send customers’ details to their criminal network.

He said: “Now for measures to reduce fraud…fraud cannot be eradicated. It’s part of human nature. What we do at my bank is that we have levels of authorisation. So the person who initiates a transaction does not have the authority to approve it. That’s the first thing.

“Secondly, there are people within banks who see newly opened accounts (retail customers) and so they send the customer’s information to fraudsters they’ve partnered with.

“Now what has become sort of a norm is telling customers upon opening their account that they are not to send any of their details to anyone. Even if they say they’re from that bank’s branch where the account was opened.”

Neusroom sent an email to the regular banks in Nigeria on efforts they have in place to prevent rogue staff from using customers’ information to defraud them. We do not have any responses yet.

An email to the CBN asking what the Apex bank is doing to help prevent electronic bank fraud especially the ones targeted at new bank customers has not been acknowledged.

 Significant cases

On Friday, April 29, 2021, operatives of the Economic and Financial Crimes Commission (EFCC) arrested Elizabeth Modupe Osunjuyigbe, a staff at Access Bank, for allegedly diverting N34 million

According to the report, she allegedly “sent a fraudulent request sometime in January to the Branch Service Manager of Access Bank, Adeola Odeku, Lagos State, to issue a draft of the sum of N31, 330, 165. 00 (Thirty One Million, Three Hundred and Thirty Thousand, One Hundred and Sixty-five Naira) in favour of one Best Timland Nigeria Limited.

“Investigations revealed that the suspect allegedly forged a solicitor’s letter dated January 19, 2021, directing the bank to issue the draft in favour of Best Timland, claiming that the request was for the payment of rent to the landlord of one of the bank’s branches in Akwa-Ibom State.”

A former banker, Ebe Okokon, was sentenced to prison in March after he was convicted of defrauding someone of N970,000. In his own case, despite the fact that he was not working in a bank as at the time he committed the crime, he was able to use his knowledge and connection there to defraud his victim.

What is seen from the two examples above is that bank staff and even those who have left the establishment are still able to use their knowledge and possibly access to vital information to defraud customers, especially new account holders who have not had a lot of experience in banking security.

The 2020 case of Abolade Bode v. First Bank of Nigeria Plc. & MasterCard West Africa Limited in which the Federal High Court in Lagos ruled that banks and not credit card companies can be liable for fraud and compromise of debit cards shows that banks have a duty to protect customers from both external and internal fraud.