The news:
- In 2023, Access, Nigeria's largest commercial bank by assets, reported losses of ₦6.15 billion from fraud and forgery, up from ₦1.44 billion the previous year.
- Fraudulent transfers, withdrawals, and reactivation caused 80% of the loss, followed by embezzlement (29%), which included cash theft, suppression, pilferage, and dry posting, as well as electronic fraud and USSD (9%).
- The report, consolidated and separate financial statements for the year that ended on December 31, 2023, featured the total number of attempted and successful fraud and forgery incidents for the period.
Per the report, 6,771 attempts — the highest in 2023 — were made for electronic fraud and USSD, involving a total of ₦2.69 billion. But the total loss was only ₦92.2 million.
While electronic fraud and USSD ranked third highest in 2023, they ranked number one in the previous year, accounting for 80% of all recorded fraud and forgery cases. Compared to 2023, the total attempts were almost double at 11,403 total attempts and nearly 13 times the loss at ₦1.15 billion.
Although it’s unclear what measures the Access Holdings subsidiary implemented to fight electronic fraud, the report indicates that the bank significantly reduced the incidents.
Access Bank and other financial institutions undoubtedly have individual ways of combating fraud. However, there’s a growing clamour for industry-wide collaboration.
Recent reports suggest that 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 working closely together to develop a plan to combat fraud in the country.
Access Bank isn’t the only lender that has had to deal with electronic fraud. A 2023 report on fraud and forgeries in Nigerian banks showed that ₦5.79 billion was lost in just the second quarter (Q2), an increase from the ₦472.28 million recorded in the first quarter (Q1) of the same year.
Union54, a Y Combinator-backed card issuing platform, experienced chargeback fraud in 2022, which the startup later revealed had been an issue since its inception. Consequently, several financial startups suspended their virtual card offerings temporarily.
Union54 managed to prevent losses that could have exceeded $1 billion, but it wasn’t before it incurred about $500,000 in chargeback fees. The company eventually opted to kill the product.
Interswitch, an older Nigerian-based integrated payment platform, was also said to lose ₦30 billion to chargeback fraud, although it recovered part of it.
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Financial institutions, including Access Bank, are also battling Point-of-Sale fraud. In Q2 2023, approximately 2,000 cases of point-of-sale fraud were reported, totaling ₦428 million. The previous quarter saw an additional loss of ₦450 million.
