The Central Bank of Nigeria last week released draft guidelines aimed at reducing incidents of push payment fraud in the country. Push payment fraud — where users are deceived into voluntarily sending money to fraudulent parties — has risen alongside the rapid growth of digital payments, the CBN says, resulting in significant losses to financial institutions and customers.
The new rules come as the CBN steps up efforts to curb fraud in the financial system. Recent regulatory measures include mandatory geotagging of POS terminals and tighter restrictions on agent activities.
The draft guidelines are intended to ensure that financial institutions put stronger preventive measures in place to curb the phenomenon. It directs financial institutions to set up round-the-clock reporting channels for customers, including social media handles, emails, mobile applications, and in-person communication channels.
Customers are required to report incidents of push payment fraud to financial institutions within 24 hours of discovering the fraud. However, it provides for an additional 48 hours to make a report which should include necessary information to help with investigations.
Financial institutions must acknowledge receipt of such reports within 24 hours and provide a unique case reference number and resolution timelines. It also enforces a 14-day timeline for concluding the investigation. During this period, they may work with the CBN, the Nigeria Inter-Bank Settlement System (NIBSS) and relevant organisations to withhold settlement of the affected funds.
Financial institutions are not obligated to reimburse a customer where a report is not made within 72 hours and without reasonable justification, such as illness or security constraints.
Guidelines are set for reimbursement. For example, customers eligible for reimbursement must receive the funds within 48 hours of the conclusion of an investigation. However, where none of the financial institutions involved are responsible for the fraud but the customer is eligible for a refund, both institutions shall equally share the liability.
In cases where a resolution is not reached, the complaint can be escalated to the CBN’s Consumer Protection and Financial Inclusion Department for a verdict. The Department also serves as a final arbiter for disgruntled users.
Responsibility for enforcing these rules, as well as any additional risk-management frameworks a financial institution implements, lies with its board. Boards must also monitor fraud trends and verify the effectiveness of the controls they establish.
