Curbing Online Financial Fraud


Ugo Aliogo, writes on the need for bank customer to be cautious against fraudsters who pose as representatives of financial institutions to defraud customers

With the increasing adoption of technology in every sectors of the economy, including the financial sector, banking processes have greatly improved. Today, customers enjoy convenience and efficient banking, because financial institutions leverage different technology platforms to deliver services.

But on flipside the banking public has been victims of fraudulent activities because of the scheming acts of some unscrupulous individuals.

It has been argued that financial fraud is not a healthy development for the banking ecosystem because it erodes consumer trust in the financial service sector; for the argument to be valid, it should not be examined only from the angle of the bank, but also on the part of the customers.

Most customers due to negligence give out their bank details to fraudsters who pose as bank representatives in disguise of protecting customer details. These fraudsters send unsolicited text messages to bank customers requesting them to call a phone number to stop an ongoing transaction. There are cases these fraudsters call the customer posing as bank representative and solicit for bank details from gullible customers. Once a customer gives heed to this request, the individual falls prey to the antics of the fraudster and if unlucky the customer is robbed of his/her financial fortunes.

The banking public should be informed on the need to prevent unauthorized access to their account upon the unfortunate incident of death of a customer.

The banking regulation states that upon the death of a bank customer; the family of the deceased should notify the bank to enable the immediate freezing of the deceased customer’s account. This is pivotal to preventing unauthorised persons from having access to the funds, pending when the funds will be properly discharged by administrators. This effort will help stem the tide in fraudulent activities on deceased customers’ accounts and ensure funds are discharged according to stipulated laws.

Another vital issue in financial fraud is the sending of cash to the bank through third party. Most customers have lost their monies through third parties unexpectedly, while some have had their bank details compromised through the deposit of cash by third party.

Every account holder is expected to make cash deposit of their monies directly in bank or use an Automated Teller Machine (ATM) or Mobile App. If a third party is in possession of a customer’s bank details, there is the likelihood of using it for criminal activities or obtaining other useful information about a customer. It is important for the banking public to be informed to always deposit funds into their account by themselves to reduce the risk of fraud by individuals with ulterior motives

Unscrupulous individuals have taken undue advantage of people’s account, while posing as bank’s representatives, therefore this calls for caution, and the banking public to stay scam alert and smart to avoid falling into the hands of fraudsters.
Due to the presence of mobile banking apps, most customers don’t see the need of keeping their TSP receipt. The banking regulation provides that the banking public (customers) should ensure that after every deposit transaction, the TSP receipt is collected and kept.

However, most customers run afoul of this regulation to their own detriment. After each deposit transactions, they jettison the TSP receipt of payment. The bank regulations provide that the public be enlightened to always confirm their deposit details before carrying out transaction in the bank. The regulations call for strict possession of the TSP receipts after every transaction.

Sensitive personal effects such as ATM and simcards are linked to customers’ bank account. Often times, there have reported cases of these personal items been used by individuals to perpetuate criminal activities such as financial frauds, armed robbery and others. Unscrupulous individuals gain access to these personal effects through theft and negligence of individuals who misplaced the items because of careless or maybe the items are expired.

The banking regulation states that the banking public should be prompted to notify their bank immediately they notice fraudulent activities on their account. The regulations also states that the bank should be immediately notified upon the loss of bank account token, phone number or simcard that is linked to one’s bank account.

The regulation further provides that the bank should be immediately notified upon the compromise of one’s email address that is linked to one’s bank account. It adds that the bank should be immediately notified upon the suspicion that one’s bank account vis-à-vis ATM card pin number, mobile and/or online banking applications and others have been compromised.

Commenting on the issue, the Chief Executive Officer, Cowry Asset Management, Johnson Chukwu, said it is difficult to eliminate fraudulent activities in any industry, however he charged banks to increase awareness creation to their customers especially on the need for them not diverge their access code to a third party.

He advised bank customers not to diverge their banking details to a fraudsters who disguise themselves as the bank representatives, adding that the bank will not at any point give out their banking details to a third party.

According to him: “The second measure is for the banks to build higher levels of controls checks and balances and validation processes. The validation process will involve reaching out to the customer, using things such as voice recognition so that if these unscrupulous individuals call, and the bank voice recognition system doesn’t recognises the customer’s voice, the transaction would fail. There should also put in place layers of control on some private questions such as mother’s maiden name, date of birth and others, before the bank will validate the transaction that the customer wants to do online.

“The bank can also build additional level of validation process where they need to get a lot more private information from the customers and until such information is confirmed, transactions cannot be approved, in that way once we have control system that makes it difficult for fraudsters to succeed, many of them will back out because the reward for them is that they succeed and if the likelihood of success is slim, most of them will back out.”