In 2023, Nigeria’s largest commercial bank by assets, Access, reported a substantial increase in losses due to fraud and forgery, rising to ₦6.15 billion from ₦1.44 billion the previous year. The majority of these losses (80%) resulted from fraudulent transfers, withdrawals, and reactivation, while embezzlement accounted for 29%, involving cash theft, suppression, pilferage and dry posting. Electronic fraud and USSD made up 9% of the total losses.
This information was released as part of Access Bank’s financial statements review for the year ending December 31, 2023. The report highlighted a total of 6,771 attempted instances of electronic fraud and USSD in 2023, involving around ₦2.69 billion. However, the actual losses culminated to only ₦92.2 million.
In the year prior, electronic fraud and USSD accounted for the lion’s share (80%) of all recorded fraud and forgery cases. The total attempts in that year were nearly double the 2023 figure, standing at 11,403 attempts, and the incurred losses were almost 13 times higher at ₦1.15 billion.
While the specific anti-fraud measures taken by Access Bank’s subsidiary, Access Holdings, was not explicitly stated in the report, it does indicate that the bank was successful in significantly reducing electronic fraud incidents.
While individual strategies to counter fraud are employed by Access Bank and other financial entities, there’s an increasing call for collective action within the industry to deter such malpractices.
Access Bank is not the only financial institution battling electronic fraud in Nigeria. A report revealed that Nigerian banks collectively lost ₦5.79 billion to fraud and forgery incidents in only the second quarter of 2023, increasing significantly from previous losses of ₦472.28 million reported in the first quarter of the same year.
Several organizations, including the Nigerian Electronic Fraud Forum (NeFF), the Association of Mobile Money and Banking Agents of Nigeria (AMMBAN) and the Nigeria Inter-Bank Settlement System (NIBSS), are reportedly collaborating to devise strategies to curb fraud within the banking sector.
Notable examples of Electronic financial fraud have been seen with Y Combinator-backed card issuing platform, Union54, which faced chargeback fraud in 2022 to such an extent that they had to suspend their virtual card offerings temporarily. Despite preventing potential losses exceeding $1 billion, Union54 sustained about $500,000 in chargeback fees and ultimately decided to discontinue the product.
Similarly, Interswitch, a Nigerian integrated payment platform, reportedly lost ₦30 billion to chargeback fraud though they were able to recover a portion of it.
Access Bank, along with other financial institutions, is also confronted with the issue of Point-of-Sale (POS) fraud. In the second quarter of 2023, an estimated 2,000 cases of POS fraud, leading to losses amounting to ₦428 million, were reported. Moreover, the preceding quarter had recorded an added loss of ₦450 million associated with POS fraud.
