ATM fraud escalates

• As CBN received and processed 6,274 fraud complaints
By ODUNEWU SEGUN

THE rising incidence of e-banking fraud, especially with the Automated Teller Machines (ATM) in the country has become worrisome to the extent that most Nigerians now prefer to visit banking hall rather than use the ATM for cash transactions.
From the issues of clone ATM cards to non-dispensing of cash despite debiting the account of holders of such cards, Nigerians have continue to groan, bemoan and doubt the readiness of Nigerian banks for the much hyped e-banking.
A recent survey by Visa International showed that high net worth account holders neither own nor use ATM cards. The study revealed that people that earn below N500, 000 per annum, which form 47 per cent of its respondents, own and are regular users of debit cards, including for online purchases. It showed that the higher earners owned or use their debit cards. Majority of the rich, it said, think that avoiding debit cards is the best way to stay protected from online frauds.
Data obtained from the CBN result for 2014 showed the bank received and processed 6,274 complaints, via e-mail on various financial crimes, particularly advance fee fraud. There were 4,527 cases of fraud and forgery involving the sum of N14.8 billion and $1.6 million. The CBN also received and investigated four complaints against the commercial banks even as the issues were promptly reported to the law enforcement agencies such as the Economic and Financial Crimes Commission (EFCC) for investigation.
Managing Director, Happy Man Magnificent Ventures Limited, Celestine Enemuo, is of the view that Nigeria’s evolving cashless policy is good, but he puts the blame for the present skepticism over electronic-based payment squarely on the shoulders of banks and the CBN.
“Sometimes, the ATMs will send you alert saying, transactions not completed, but you will get alert showing that you have been debited. And for you to go to your bank to reclaim your money, it will take you time, energy and resources,” he lamented, adding: “But if they can emulate practices in other countries, it will be good.”
According to Emeka Igwe, a civil servant with the Lagos State Ministry of Environment, on the 3rd of September, 2015 at around 9.pm, he got an alert from Eco Bank, his banker that he has withdrawn N60,000 with his ATM card. But he was at home, and was nowhere near any ATM machine on the said date or the one before.
According to experts, Nigerian banks are using an outdated Microsoft Windows operating system, which is vulnerable to hacking, for their operations. This is partly responsible for the frauds associated with their operations. Microsoft Nigeria said 95 per cent of all ATMs which run on Windows XP operating system are vulnerable to hacking. General Manager Microsoft Nigeria, Kabelo Makwane said machines that run on outdated operating systems do not receive security updates are the easiest to hack.
Another victim, Sunday Ogunjobi, a trader on the Lagos Island was swindled of N100,000 by a customer who purportedly transferred the said amount only for Ogunjobi to realised later that the alert he got earlier from the said transaction was fraudulent. “The customer said he had no cash and requested for my account details to transfer the money. He typed the number on his phone and within few minutes, I got transaction alert from my bank First City Monument Bank (FCMB). The alert showed that N100, 000 had been credited to my account. So, he took the goods and went away.
“The next working day, which was Monday, I went to the bank to withdraw the money but it was not there. My account officer showed me my last transaction detail, and informed me that the alert on my phone was not from the bank and that it was a fraud. That was how I lost the money and all efforts to trace the fraudster failed.
Ogunjobi released the goods because the alert showed his previous account balance and the new deposit by the customer. That, he said, was an indication that the fraudster was collaborating with an insider from the bank. “Up till today, I have not recovered that money,” he lamented.
The Managing Director, Park and Carry Limited, Ekwueme Emeka, does not use ATMs because of fear of insecurity. “I don’t use ATMs. I make my transaction through cheques and withdrawal booklets. It is much quicker and less stressful. Poor network quality remains a major issue that reduces my confidence in e-payment. Sometimes, you go there, slot in your card and nothing comes out but your account is debited,” he said.
Sarah Jeremiah, an information technology specialist, is also not comfortable using ATM. Jeremiah conceded that though ATM has made banking easier for Nigerians, but regretted that dispensing error is a major challenge. “The other day, I wanted to withdraw N50, 000 from the ATM. The machine debited my account but did not dispense the cash. I was told it will reverse the transaction within 24 hours. It never did until after 21 days, “she said.
She explained there were several times when his account was debited and the money was not dispensed, a situation she described as worrisome. “It was N20, 000 they took from my account. I did not get it back until two months after,” she said.
Aware of these dangers, the CBN has decided to set up a five-year Information Technology (IT) Standards for banks. CBN’s Director, Information Technology, John Ayoh, said the exercise would help banks identify and adopt global IT standards that address industry problems. He said banks were expected to implement the plan on continuous basis and in accordance with set timelines.
CBN’s Director, Banking Payment and Systems Dipo Fatokun said the introduction of chip-and-pin payment cards have led to drastic drop in ATM card fraud. He said the CBN and other relevant institutions have been able to reduce card frauds considerably by instituting ATM Fraud Prevention Group and the Nigeria Electronic Fraud Forum (NeFF). The groups are to enable banks to collaboratively share data on fraud attempts and proactively tackle them to reduce losses.
According to Fatokun, the CBN, instructed banks to set and implement mandatory daily limits for ATM cash withdrawal, while other related transactions, including PoS and web purchases should be subjected to stringent limit as agreed and documented between the banks and customers. He said it was the responsibility of the banks to ensure that a trigger was automatically initiated when limits were exceeded.