Economy and Business

Lamentations galore as Nigerian banking customers lose staggering N51 billion to fraud

Recent reports have surfaced, revealing Nigerian banking customers’ staggering loss of N51 billion in savings due to fraudulent activities.

Leadership’s exclusive findings expose a concerning trend, with cybercriminals now setting their sights on defrauding Fintech bank customers nationwide.

According to the report, from 2019 to July 2023, Nigerian banking customers fell victim to substantial losses, tallying up to N50.5 billion attributed to various forms of banking-related fraud.

The surge in financial deceit gained momentum, especially after the cash crunch resulting from the naira redesign and the implementation of cash withdrawal limits by the Central Bank of Nigeria (CBN).

As of July 2023, the recorded losses to fraud have surpassed N9 billion, sparking concerns that the figure could soar to over N20 billion by year-end.

Cybercriminals have intensified their efforts, targeting customers utilizing Fintech banks and exploiting perceived weaknesses in these platforms’ security protocols.

Fintech banks, initially conceived as streamlined payment platforms, have been misunderstood by certain segments of users, including market traders, artisans, and entrepreneurs.

This misinterpretation has resulted in numerous individuals falling prey to fraudulent activities, facing considerable challenges in recovering lost funds due to the absence of physical offices for these platforms.

Perpetrators often exploit Point of Sale (PoS) machines or trading platforms to execute illicit fund withdrawals, complicating restitution efforts.

Among the affected Fintech banks are prominent names like OPay, Palmpay, and Moniepoint. Instances have emerged where customers grappled with the arduous task of reclaiming vanished funds, intensifying apprehensions about the safety and security of digital platforms.

Despite concerns, certain users maintain steadfast confidence in Fintech platforms, praising their seamless services and reliability.

A store owner, Mr. Seyi, said he used all the POS terminals that are available because “if I want to do a transaction and there is a network problem, I can use another one. I have been using POS for the past two years. I save my money on it because if I withdraw the money today, for instance, and I want to use it for business the following day, I will still have to put money on it, so I just leave it there, and I have not recorded any fraudulent activities.”

Another POS user said she uses Microsystem POS.

“I can tell you I prefer its network to other fintech POS or deposit bank POS because of the problem they create for us. We leave our money there and this is because we use it for business,” he said.

Adamu Sanusi was, however, cautious of fintechs, saying, “I do not use all these payment apps. How can I leave the deposit money banks and start using a fintech bank? If I have an issue with them, how can I locate them? My friends use them and encounter challenges. I do not want to stress myself; hence, I stick with the bank. I know I can quickly enter their office and complain if there is an issue.”

Industry experts underscore the imperative for Fintech companies to enforce stringent Know Your Customer protocols, institute proactive fraud detection mechanisms, and conduct extensive customer education on account security.

Suggestions include the integration of biometric verifications such as fingerprint and facial recognition, along with rigorous transaction monitoring to identify and address suspicious activities promptly.

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