In recent years, there has been a significant increase in online scams targeting bank customers. Business Editor, Onu Okorie in this article, attempts to proffer measures to protect bank customers from the growing threat of scammers, a scourge that is becoming more sophisticated and are taking place on various platforms, including social media, online marketplaces, and dating apps. Excerpts:
The growing threats of online scams targeting bank customers is a concerning trend that requires concerted efforts from both banks and customers. There has been a significant increase in online scams in the banking industry across the globe.
According to an Information Security Analyst, Dr Francis Akogwu Alu, Banks have reported a surge in fraudulent activities, with a large portion of scams occurring on social media platforms, online marketplaces, among others. Dr Akogwu observed that the scale of online scams is alarming, with billions of dollars being lost to fraudsters each year.
In 2021, Reports have it that bank customers lost over $5.8 billion to frauds globally, representing a 70% increase compared to the previous year, 2020.
In the United Kingdom alone, customers lost £583 million to authorized push payment (APP) scams in 2021, a 39% increase from the previous year.
According to recent reports by the Financial Institutions Training Centre (FITC), bank customers in Nigeria lost N2.72bn to fraud in the first and second quarters of 2022.
In the first quarter of 2023, bank customers in Nigeria lost N472m to fraud.
However, another report by states those Nigerian banks lost N3.5 billion between July and September 2020 to fraud-related incidences, representing a 534-percent increase from the previous year.
It is instructive to note that the amount lost to fraud may vary depending on the source and time frame of the reports. There is no gainsaying that customers are losing confidence in the banking industry because of the the scam menace.
To describe the effect of scam on the sector, the story of a prospective small business owner who became victim to the scammers comes in handy: “On June 7, 2017, Umoh transferred N1.5m from one of her business bank accounts to her personal bank account to buy her Personal Travel Allowance for the journey.
“The next day being the 8th of June, she wanted to refund a customer who had been debited twice while using her bank’s Point of Sale machine during the Lagos Leather Fair held the weekend before. She typed in her bank’s mobile app password and got an error message, saying the credentials she had put in were invalid. She tried it the second time and it said the same thing.
Immediately, she called the customer service number, explaining to the woman who picked the call what was going on. She was then told to reactivate her app. She did just that and the app requested for her PIN. She typed in her PIN and it said it was invalid again.
Umoh said she explained this to the customer service representative who was still on the call with her and she advised that she should visit the bank. She could do this the same day as it was almost 4pm.
Less than five minutes after the call, she started received text messages of debit alerts from her bank on strange names. Immediately, it occurred to her that her account had been hacked. She quickly called the customer service, while rushing to the bank.
She was at the bank when the debit alerts of the money being withdrawn were still buzzing and she screamed at the customer service lady that all her money was gone and that her account should be blocked at once. Her account had been cleared of approximately N2.1m within 30 minutes.
Although, the bank succeeded in recovering and refunding N668, 000, however, the story of her life and business venture has never remained the same.
The consequences of falling victim to these scams can be devastating, leading to financial loss and potential damage to one’s reputation. Mrs. Nwakaego Ugwu, a retired primary school teacher, said her savings was wiped out within a minute some time in 2021.
Narrating her experiences, she said she was in the farm when someone called her cellphone and mentioned her full name claiming he was calling from her bank.
“Immediately he told me he was calling from my bank and demanded few details of my information saying it was required to fix some faults in my account, I obliged him and the next thing my money was wiped out. I almost ran mad because it was not only my money that was in that account. There were contributions from women wing in my local church which I also kept in the bank for safe keep. When I rushed to the bank the next day, they could not help me. The money was gone. It was my son who eventually paid all the money because when I complained to him he immediately transferred the exact amount into my account in order to save me from the scandal such story could cause in the church” she said.
Another customer, Ayomide Adedeji, a computer operator, in a newspapers outfit in Abuja, said his experience was too bad because it was at the time he got soft loan from the Central Bank of Nigeria during the Covid 19 Pandemic.
Adedeji said he lost his Automated Teller Machine (ATM) card after making a withdrawal somewhere around Wuse zone 3.
“It was already in the evening so I waited for the next day to go and complain. But at about 1am the following morning I started receiving debit alerts. The alerts continued coming until the whole money was gone. First thing in the morning, I rushed to the bank and was told at the customer care desk that my card fell into the wrong hands. One of the bankers printed receipts where I had purportedly made online shopping somewhere in Los Angeles, California in the United States of America. I am still repaying the loan till today “ he lamented.
Banks may be making transactions increasingly secure, but with fraudsters proving more skilful than ever, the suspicion and fear felt by customers is paradoxically on the rise.
Elsewhere in France, the Annual Report 2021 from the OSMP (Observatoire de la Sécurité des Moyens de Paiement — Observatory for the Security of Payment Means) reveals some startling figures. Namely, there were 7.5 million fraudulent transactions in 2021 in that country, worth a total of €1.24 billion.
A first conference on French bank fraud victims was held at the Research and Innovation Exhibition in October 2022.
The first key figure revealed by this victimization study which was conducted during the conference is the prevalence of bank fraud in France in 2022, that is, 8.4% of the French population said they had been a victim of bank fraud in a personal capacity at least once during the last 12 months. The payment methods concerned were primarily cards or those directly involving bank accounts, transfers and direct debits.
The study observed that fraudsters obtain personal data via phishing, which involves posing as a reputable entity or person via a website, text message, email or social media page to trick the victim into providing their personal information.
Scammers also often use tactics such as impersonation, investment fraud, and fake listings to deceive unsuspecting individuals.
Experts also warn that employees within the bank who have access to sensitive information and transaction systems can sometimes collude with external fraudsters or carry out fraudulent activities themselves.
This can involve unauthorized transactions, forging documents, or manipulating accounts.
The foregoing highlights the need for customers to be vigilant and cautious when engaging with online platforms.
A retired banker, Mr. Ikenna Obiefuna, provided few tips for staying safe from falling victim of bank frauds.
According to Obiefuna, in addition to the efforts made by banks, customers themselves play a crucial role in protecting themselves from scams.
“Be cautious on social media: Be wary of unsolicited messages or friend requests from unknown individuals. Avoid sharing personal or financial information on public platforms.
“Verify before trusting: Always verify the authenticity of any offers, deals, or requests before providing any sensitive information or making financial transactions. Contact the organization directly through official channels to confirm the legitimacy of the request.
“Stay informed: Keep up-to-date with the latest scams and fraud techniques. Stay informed about common tactics used by scammers and be vigilant in identifying red flags.
“Protect personal information: Safeguard your personal and financial information. Use strong, unique passwords for online accounts and enable two-factor authentication whenever possible.
“Report suspicious activities: If you encounter any suspicious or fraudulent activities, report them to your bank and local authorities. By reporting scams, you can help prevent others from falling victim to similar schemes” he advised.
He further pointed out the need for banks to invest in robust cybersecurity measures, implement effective fraud detection systems, enhance customer education efforts, strengthen regulatory oversight, and promote a culture of ethics and transparency within their institutions.
Speaking on other suggestions that study has shown on how to escape the bubby traps of scammers Dr Alu said they include: conscientiously increasing awareness, implementing robust security measures, and empowering customers to protect themselves, banks and customers can work together to combat online scams and ensure a safer banking experience for all.
Dr Alu who drew inference from an article by McKinsey & Company “A new approach to fighting fraud while enhancing customer experience” explained that leading organizations should constantly search for emerging threats (including fraud, cybercrime, and money laundering) and assess their potential impact. Monitoring of controls used to mitigate risk can reveal the (in) effectiveness of the control or its usage strategy.
Having controls that are durable, flexible, and adaptive is critical to any fraud management program. Further, having the right supporting analytics is fundamental to the control’s effectiveness.
Detection platforms that incorporate broadly based and detailed information can identify existing and emerging fraud attacks, whether they occur in the new account acquisition stream (identity theft), are perpetrated against existing legitimate customers (account takeovers), or arise from the theft of services (such as reward program theft). Artificial intelligence and machine learning (AI/ML technologies) support these approaches.
Also it’s said that top music performers effectively promote consumer awareness and education relating to fraud and cyber threats. For instance, viral channels and social media can be used to maximize reach by the fraudsters. So to curtail their nevarous activities, awareness should be raised to inform the public.
