COVID-19 Relief Funds: Nigerians Lose N2.7bn To Fraudsters—NIBSS

Nigerians trying to access several COVID-19 relief funds last year lost N2.75 billion to fraudsters as data released by the Nigeria Inter Bank Settlement System (NIBSS) the custodian of banking sector data, showed that 68 percent of fraud perpetuated in the third quarter of last year was through social engineering.

Social engineering is when fraudsters trick individuals to reveal personal data that could be used to access their bank accounts. Fraudsters had taken advantage of the several government social intervention funds aimed at relieving the impact of the COVID-19 pandemic on Nigerians to rob them of their funds.

Last year, fraudsters had sent messages via WhatsApp and text messages telling people to fill a form to be a recipient of some of the funds being disbursed. Also the federal government N-Power website had been cloned as individuals filled out sensitive information on phoney websites.

All these alongside the phishing emails and text messages had culminated in increased loss to fraud last year. According to data from NIBSS, attempted fraud value rose by 44 per cent in the third quarter of 2020 compared to Q3 2019, while actual loss value for Q3 2020 rose by 500 per cent compared to Q3 2019.

In Q3 2019, there was 10,692 attempted fraud with a value of N1.09 billion, while actual loss was N552 million. The figure however rose to 16,988 attempted fraud with a value of N3.5 billion of which actual loss to fraudsters was N3.35 billion.

The report showed that social engineering is still a preferred and successful technique employed by fraudsters as a total of 11,589 cases were reported to have been carried out using various social engineering techniques resulting in N42.755 billion fraud loss value for Q3,2020. This makes up for 68 per cent of the entire fraud volume and value for the Q3 2020.

In comparison to Q3 2019 fraud volume across fraud techniques such as lack of second factor authentication, robbery and lost cards decreased in volumes, while social engineering creased by 144 per cent for Q3 2020.

As with the first half of the year, the highest losses to fraud were recorded on the web channel in Q3, 2020 with a percentage fraud volume of 35.5 per cent from the total fraud volume recorded. The mobile channel with a loss of N410 million made up 11.7 per cent of the entire fraud loss values in Q3 2020. Trend from start of year till date shows that the web and mobile channels are viable mediums for exponential fraudulent gains.

The highest fraud loss values reported for the two consecutive quarters Q2 and Q3 2120 were on the web channel each making up 71.42 per cent and 68per cent respectively from the entire loss values reported. Fraud volume on mobile in Q3 2020 decreased by 5 per cent when compared to Q2 2020. Overall fraud volume and value decreased across all channels in Q3 2020.

Meanwhile, the report revealed that online gambling, and betting has grown to be the preferred means of fraud proceed utilisation. Reasons for growing preference by fraudsters is the minimal customer KYC requirements for onboarding, authentication and the option for immediate cash-outs which can be difficult to trace. This medium according to NIBSS has become lucrative for fraudsters to cart away stolen funds.

To mitigate against the use of these channels by fraudsters, NIBSS recommended that relevant stakeholders should ensure compliance to KYC requirements for opening wallet accounts. “Online gaming operators carrying out additional KYC on their customers to ensure adequate details are captured traceable to gamer plus restrictions on cash-outs,” it stated.

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