By Chinenye Anuforo [email protected]
Nigeria’s digital payment boom come with a dark side as fraud losses increased significantly in five years.
A new report by the Nigeria Inter-Bank Settlement System (NIBSS) reveals a staggering 496 percent increase in fraud losses over the past five years, reaching a total of N59.33 billion by 2023. This dramatic rise coincided with a massive 463 percent jump in electronic transactions to N611.06 trillion in 2023 from N108.42 trillion in 2019.
The NIBSS’s ‘Annual Fraud Landscape’ report, covering January to December 2023, revealed this trend.
Mobile phones are the new battleground for fraudsters. While the number of victims decreased slightly in 2023, the actual losses they suffered rose by 23 percent. Criminals primarily target individuals aged 40 and above, exploiting vulnerabilities in mobile banking.
Social engineering remains the top tactic, with mobile channels recording the highest number of attacks and the most significant financial losses. Lagos state bears the brunt of these scams, accounting for nearly half of all cases and financial losses.
A breakdown of the fraud count revealed that mobile channels recorded 47,526 cases (with N5.69 billion lost), web 21,887 cases (N2.22 billion lost), Point of Sales 17,560 cases (with N4.42 billion), internet banking 5,381 (N4.09 billion lost), e-commerce 2,449 cases (N144.1 million lost), and ATMs recorded 722 cases (N63.6 million lost).
Fraud loss via Internet banking increased by 325 percent between 2022 and 2023. “This is largely due to a N2.4bn internal fraud on corporate accounts reported by a DMB,” NIBSS noted.
Experts warned that the fight against fraud is far from over. The NIBSS report urged financial institutions to improve security measures and collaborate to tackle this growing threat. The report also emphasized the importance of fraud education, particularly for vulnerable demographics.
They highlighted the need to ensure that advancements in financial technology don’t hinder financial inclusion. A recent report from the Financial Institutions Training Centre (FITC) echoed this sentiment, urging banks to strengthen security protocols and invest in advanced fraud detection systems.
“Nigeria’s digital financial revolution requires a robust defense against fraud. Collaborative efforts and increased awareness are crucial to protecting citizens and the financial system”, Jide Awe, CEO Jidaw Systems Limited stated.