Banks caution Nigerians against fraud, emergence of new MMM

As 2017 calendar year winding to an end, Deposit Money Banks (DMBs) operating in the country have warned Nigerians to be wary of fraud related cases and emergence of new wonder banks.

The warning became necessary due to the usual fear of Nigerians celebrating festive season without money in their pockets, but the December 2016 sad experience of the crashing of the money making scheme popularly known as MMM with huge investments.

Due to this fear of uncertainty, commercials banks under aegis of the Bankers Committee, through the Group Managing Director/CEO, Mr. Emeka Emuwa, has warned that the general populace should be careful if an offer seems to be too good to be true,  while linking it to the 2016  incident of MMM and other wonder banks in the past.

According to him, “I don’t think that has started again but it is important to raise that awareness and you hear more of it as we go into the last quarter of the year, because it is towards the end of the year that you find more intensity in attempting to defraud the people.”

It would be recalled that the Central Bank of Nigeria (CBN) has said Nigeria lost N2 billion to electronic fraud(e-fraud) in 2016, describing it as the biggest challenge facing the electronic payment sector and needs to be collectively tackled by customers, banks and financial sector regulators.

CBN Director, Banking & Payments System Department, ‘Dipo Fatokun, at one of the Finance Correspondents Association of Nigeria (FICAN) Bi-Monthly forum, that fraud must adhere to strict rules and regulations and educate the public to combat fraud.

He explained that fraud not only leads to loss of funds, but reduces confidence of customers using e-channels, even as bank customers lost over N2 billion to e-fraud last year, because e-fraud has never been completely eliminated in the Nigeria’s financial system.

The e-payments are known to be driven by a network of interconnected systems, which make it possible for exchanges of value between payer and payee, sender and receivers or donor and services. Payment technologies and platforms bind the industry together in a tight ecosystem.

The CBN director, said that global non-cash (electronic payment) transaction volumes grew at 8.9 per cent to reach $387.3 billion in 2014, an increase, driven by accelerated growth in developing markets.

“Cards have been the fastest growing payments instrument since 2010, as cheque use has declined consistently and significantly. Debit cards accounted for the highest share (45.7 per cent) of global e-payment transactions and were also the fastest growing (12.8 per cent) payments instrument in 2014,” he said.

Meanwhile, the apex bank has come with new framework in a bid to mitigate risks attached to the usage of unique short codes, especially the Unstructured Supplementary Service Data (USSD) protocol for all financial services offering in the country.

The new framework was contained in a new circular by the nation’s apex bank on exposure draft sent via a circular to all money deposit banks, mobile money operators, payment solution service providers, and other service providers.

According to the CBN, “the USSD technology is a protocol used by GSM networks to communicate with service providers’ platform. It is session-based, real time messaging, which is accessed through a string starting normally with (*) and ending with a hash (#).

The framework specifically list those eligible for use of unique short codes to include mobile money operators, who are eligible for issuance from the Nigeria Communications Commission (NCC) after meeting the necessary requirements of the NCC for the issuance; and others who would need a letter of comfort from the CBN before being considered for issuance of the short codes by the NCC.

“USSD based financial transaction requires end-to-end encryption to protect the integrity of the financial information,” the CBN noted, adding that all providers of USSD-based financial services shall put in place a proper message authentication mechanism to validate that requests/responses are generated through authenticated users in order to curb risks inherent in the use of short codes.