Banks and ATM Fraud

Since the nation's banking industry popularised automation or e-transact, the response of many Nigerians that bought into the innovation has been described as a mixed grill.
There are presently about 28 million Nigerians using the cards at over 7,000 ATMs machines deployed by the banks in the last three years.

ATM growth, which makes Nigeria one of the fastest growing ATM markets in Africa, is currently projected by stakeholders to hit over 10,000 units from the combined network 24 banks by December 2009, if the current rate of operation by the banks is sustained.

E-transaction, which is about three years old, has been leverage from automated teller machines (ATM), electronic money transfer, debit cards, to the newly inaugurated electronic deposit facilities for cash and cheques.
  Although most Nigerians have accepted and commended the innovative e-transact for the elimination of human bureaucracy and management of time, others have continued to distance themselves from the civilization.
  Most Nigerians, who distanced themselves from the e-transacts window -- especially from the ATMs' - said that the innovative machines have become avenues for fraud.
Mr Ikechukwu Oranu, one of the victims of the increasing ATM frauds, said that fear of losing all his wealth through automated driven scams has challenged him to close his accounts in two commercial banks.
Oranu, a second-hand vehicle dealer based in Lagos, said that he lost N400,000 in two separate incidents where unknown people accessed his accounts in the two banks.

  The fraudsters, according to the businessman, removed via ATM N100,000 and N300,000 respectively from two commercial banks in a manner that has perpetually given him sleepless nights about the safety of his deposit in banks.

"I am done with ATMs. I don't think that they have enough securities that protect people's deposit, hence, my decision to drop the facility," Oranu said.
Oranu, who said that his banks are still studying and investigating the circumstances which led to ATM fraud, also lamented the long time it has taken them do this.
In the same vein, Mrs Ronke Adeyeye described ATMs as one of the nation's fastest electronic fraud that banks and government were treating with levity.
Adeyeye rejected banks' claims that ATM frauds were the fallout of depositors who compromised their cards.
She stressed that the increasing incidence of the scams showed that the card system was highly porous and easy to hack into.
  Adeyeye, a canteen operator who lost N200,000 through ATM fraud, also questioned the nonchalant attitude of government to "the national financial industry threat.

"ATM fraud, irrespective of how the operators and government treats it, is a national problem which, if not handled fast and nipped in the bud, will rubbish all our gains in the financial service sector," she said.

However, Intercontinental Bank Plc. Group Executive Card Services, Mr Roland Obe, said commercial banks were not oblivious of the increasing national ATM associated frauds.
Specifically, he explained that the fraud has challenged banks to migrate their customers from first generation "magstripe" ATM cards to contemporary secured CHIP AND PIN cards or Verve Cards.
  The Magnetic Stripe (magstripe) card was a first generation of ATM cards introduced into the Nigerian market by banks at the outset of transition to e-banking, with a characteristic black stripe at the back of the card that stores vital information of the card and the holder.
The storage mode of the cards made them easy to be cloned, hence, fraudulent transactions, to a large extent, had forced banks in developed countries to adopt new CHIP and PIN cards, which are more secured.
The Verve card, which operates on the SIM card technology used in GSM phones, is difficult to clone without authorisation.
According to Obe, Intercontinental Bank has responded to Central Bank of Nigeria's earlier order for banks to change the first generation ATM cards.

  It has, therefore, stepped up efforts to protect its customers against fraud by releasing 1.2 million secured ATM Verve Cards or anti-fraud ATM to the banking public.

The banks, he said, has so far released about 200,000 units of the cards to customers while another 300,000 are currently being deployed.
"The balance of 700,000, on the other hand, have been warehoused for future deployment as soon as the customers come forward for them".
The Group's Executive, Card Services, explained that the bank's positive experience, since the introduction of Verve Card, has made the product the toast of the nation's banking industry.
About 11 banks, namely Skye Bank, BankPHB, Oceanic Bank, Ecobank, First City Monument Bank, FirstBank, StanbicIBTC, Unity Bank, Zenith and UBA, have placed orders for their own CHIP and PIN Verve cards.
The Managing Director and Chief Executive Officer of Interswicth, Mr Mitchell Elegbe, adjudged the Verve card one of the best automated cards that is very difficult to clone.

"Verve is the only CHIP and PIN card that would not only have international security features, but also addresses local security challenges in Nigeria", Elegbe said.
Although more commercial banks have embraced the new Verve cards with double inbuilt security features to safeguard increasing incidents of fraud from the automated teller machines (ATM), most Nigerians remain skeptical about the touted security features. Their skepticism is predicated on the way the operators are pushing depositors and banks to buy into the new product.
Verve Cards, like any other automation window, has no close-ended security features as there is no absolute solution to electronics purse fraud.
What is paramount here and critical toward engendering massive acceptance of automation as a Nigerian way of life, remains the conscious effort of enlightening the citizens on how to protect ATM cards pin codes - knowingly or unknowingly.