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Directive to Disconnect Switches, Payment Solution Service Providers (PSSPs) and Super Agents from NIBSS Instant Payment (NIP) Outwards System

Fraud involves deceit with the intention to illegally or unethically gain at the expense of another. Financial loss is one of the central outcomes of fraud. Fraud may be committed by an individual, a team of individuals, or the entire organization. The advancement of technology and the expansion of trade have made electronic fraud the most prevalent of the several types of fraud that exist, as fraudsters have access to new tools at their disposal to deceive consumers. Criminals may utilize personal information, such as BVN, bank account numbers, and debit card numbers, to defraud victims or even launch criminal activities in their names. Consequently, in order to safeguard ourselves and our properties, we must all be well-informed.

*The information above, which is based on the report received from financial institutions, indicates that the mobile channel is the most exploited channel by fraudsters.

Some of the latest techniques employed by fraudsters to defraud customers are;

Buy Now Pay Later Fraud

Overview

Buy Now Pay Later, often referred to as BNPL, is a service that allows customers to purchase any product or service and pay in installments over a specific period. The global BNPL market size, which is projected to be worth over 3 trillion US dollars by 2030, is now offered by many high-profile merchants both locally and globally. Fraudsters are now taking advantage of this service to defraud companies and individuals.

Challenges

  1. Account takeover: Fraudsters steal existing customers’ BNPL account details then places as many product orders as they can.
  2. Synthetic Identity Theft: A piece of a real person’s information is combined with false data to create a fake identity, open accounts, then place multiple orders.
  3. Money Laundering: Fraud proceeds or illicit funds can be laundered through this process to conceal the source and destination of a fraud scheme.

Mitigation

  1. BNPL merchants should conduct credit checks on their customers before service can be rendered.
  2. Fraud screening specifically for BNPL transactions.
  3. Proper identity verification and KYC for customers during onboarding.
  4. Multi-factor authentication to approve transactions.

 

Social Media Fraud

Overview

Social Media Fraud involves deceptive activities on social platforms, targeting individuals or organizations for financial gain. Fraudsters employ diverse tactics to impersonate organizations and scam customers via phishing, fake promotions, commerce scams, identity theft etc.

Latest/Common Social Media Fraud

  1. Commerce Scam: Fraudsters entice a customer with attractive offers on goods and services, create a sense of urgency and get the victim to pay without giving value.
  2. Promotion Scam: Scammers use fake ads to make individuals assume they are purchasing from an authentic brand.
  3. Phishing Attacks: Customers are lured with false coupons for prominent brands and personal information like names, addresses, date of birth and sometimes bank details are requested when the coupon is to be affirmed.
  4. Recruitment Scam: Fraudsters may use misleading or fake job postings to try and get an individual’s personal information or money.
  5. Lottery Scam: Scammers may use accounts impersonating a government agency to claim a customer is among the winners of a lottery and winnings can only be received after a small advance fee is paid

Mitigation

  1. Customer Education: Regularly sensitize customers about common scams, warning signs, and how to detect fake Instagram and Facebook vendor accounts.
  2. Collaboration with Social Media Platforms: Collaborate with social media platforms to report and take down fraudulent accounts impersonating organizations or institutions.
  3. Verification of Vendors: Establish partnerships with Instagram or other social media vendors to verify and authenticate vendors.
  4. Collaboration with Law Enforcement: Work closely with law enforcement agencies to to take legal action against fraudulent vendors.
  5. Customer Verification: Develop robust customer verification processes to confirm the identity of individuals conducting transactions.
  6. Staff Training: Continuously train staff on the latest fraud tactics and prevention strategies.
  7. Customer Support: Provide easily accessible customer channels and reporting mechanisms for customers to report suspicious activities promptly.

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