Nigerian Banks Lose N199Bn to e-Fraud

Nigerian banks have lost a total of N199 billion to e-fraud between 2,000 and 2014, mostly due to inappropriate and reckless management of customers’ data, according to a report by the Leadership Newspaper.

Security assessment of Nigerian banks’ websites in the last two weeks carried out by Easy Solutions Ltd, a global e-fraud protection firm, indicated that electronic fraudsters had invaded Nigerian banking environment, deploying over 185 fake mobile applications on the websites of 15 out of 17 deposit money banks with which they are extracting customers’ personal and financial information with intent to steal billions of naira from bank accounts.

According to Leadership, the latest study showed that Nigerian banks in the past four weeks faced defacement attacks on their websites. Other attacks include email spamming targeting both banks’ websites and customers’ emails with intent to slow the websites and steal customer financial data.

Easy Solutions, which presented these findings at a one-day e-payment anti-fraud forum organised by Winigroup Ltd in Lagos last Wednesday for chief information officers (CIOs) of banks and CBN officials, also showed that the banks are under constant cyber defacement attacks.

Mr Dipo Fatokun, director, Banking and Payments System, CBN, noted that the new development was a threat to the stability of the banking industry and said that to battle the upsurge of e-fraud, CBN would work with relevant stakeholders to establish an industry security operations centre and a risk information centre in order to reduce e-payments frauds and enhance trust in the payments system.

In February this year, Deloitte said phishing and insider threats will con-tinue to be biggest cyber threat sources in Nigeria, especially as crude oil prices continue to fall.

In May, the Nigerian Interbank Settlement System (NIBSS) ePayment Fraud Landscape Report stated that there was 85 per cent success in fraud attempts. It also noted that automated teller machines (ATMs) had most fraudulent transactions while Internet banking fraud loss was put at N3.2 billion within the last one year.

Mr Jeremy Boorer, International director, Easy Solutions, said: “We looked at 17 Nigerian banks 10 days ago for signs of fake mobile apps. In 15 of them, we found the following: The first to 10th banks checked were found with 13, 10, 17, eight, 11, eight, nine, 13, seven and 20 fake mo-bile apps respectively. The 11th to 15th banks were also found with 11, 14, 13, 16 and 15 fake mobile apps.’

Internet-broadbandHe warned bank customers that app stores were full of fake apps claiming to come from banks, saying once a customer downloads and enters finan-cial information, including credit/debit cards details and personal identity numbers (PIN), his/her money is gone as the fraudster will clone the cards or transfer the money through online banking immediately.

“In the last four weeks, we discovered that hundreds of defacement at-tacks are going on Nigerian banks by hackers. It highlights the fact that the websites are not totally secure. Email is still the primary attack chan-nel. They pretend to be customers of the banks to contact the bank. E-fraud is initiated through account takeover, new account and true per-son/mule.”

Boorer said all channel fraud happens in one of the above fraud types through malware, phishing, social engineering, account opening process gaps (KYC/CIP).

According to him, “Social media seems to be a concern as banks create social media accounts and ask prospective customers to open bank ac-counts on social media.

“Fake banks are springing up on the social media and the data that are used to open such accounts, you don’t know where it ends. There are fi-nancial motivations to trick people to create social media accounts to steal financial/credit information which are sold in the dark internet mar-ket for as low as $10 by competing dark internet hacker sites.”

But Fatokun, who was represented by Mrs Margaret Ogundana, head, Banking and Payment System, CBN, said the apex bank was not just advocating e-payments but doing all it could to ensure that users’ funds are well protected as they embrace e-payment.

“CBN has, therefore, been a champion for the fight against e-fraud in Ni-geria. Several initiatives, directives and fora of this nature had been at the forefront of our activities at CBN,” he said, noting that the apex bank in 2010 introduced EMV cards policy which reduced the card fraud to the barest minimum.

“Then, upward increase in fraud incidences became alarming in 2014. Reports from Nigeria Inter-Bank Settlement System Plc (NIBSS) indicat-ed that 1,461 cases of electronic fraud were recorded in that year, which was a significant increase from the previous year’s figure.