The amount lost to fraud in Nigeria’s digital payments sector has surged by 350 per cent over the past five years, rising from N11.61bn in 2020 to N52.26bn in 2024, according to a recent report by the Nigeria Inter-Bank Settlement System.
Despite the rise in financial losses, the report noted a 31 per cent decline in the number of reported fraud cases, which fell from 101,624 in 2020 to 70,111 in 2024.
However, the ratio of total reported fraud value to total transaction value fluctuated, dropping from 0.0053 per cent in 2020 to 0.0022 per cent in 2023 before increasing again to 0.0040 per cent in 2024.
According to the report, between 2023 and 2024, total attempted fraud and actual losses rose sharply by 338 per cent and 195 per cent, respectively. The report attributed this significant increase to fraud incidents at some financial institutions, which were linked to system vulnerabilities.
The second and third quarters of 2024 saw a spike in fraud activities before declining in the fourth quarter. The report highlighted cases where the identities of senior citizens were stolen and used to open fraudulent accounts. In one instance, an estimated N400m in fraud proceeds was transferred into these accounts and subsequently dissipated.
The report also exposed fraudulent activities involving compromised bank staff and agents who registered bank verification numbers for minors to open enterprise accounts. In one case, N495.3m was funnelled through an account opened with a BVN registered for a minor. In contrast, another similar case saw N507m moved through a bakery’s enterprise account. The implicated bank staff and agents have been reported to law enforcement agencies for further action.
It added that further investigations uncovered a trend where static images of Asians and Nigerians were used to generate BVNs, which were then linked to accounts in microfinance banks, mobile money operators, and payment service banks. Some of these accounts received fraud proceeds amounting to N329m shortly after they were created. Several BVNs generated using still images were later discovered and deleted, while agents responsible for the fraudulent enrolments have been reported for prosecution.
The NIBSS emphasised the need for strengthened security measures across financial institutions to curb rising fraud incidents, particularly as digital transactions continue to grow in volume and value.
The PUNCH reported that the Nigeria Inter-Bank Settlement System has said that financial institutions lost about N17.67bn.
