Nigeria Grapples with Surge in Identity Fraud as Fintech Firms Bolster Security

Nigeria is facing an alarming rise in identity fraud, with a staggering 325% increase in fraud loss via internet banking between 2022 and 2023, according to the Nigeria Interbank Settlement Scheme (NIBSS). Experts attribute this surge to poor digital and financial literacy among the Nigerian population, making them vulnerable targets for cybercriminals.

The rapid growth of digital banking in Nigeria and other developing countries makes them increasingly vulnerable to cyberattacks, which can have devastating consequences for individuals and theeconomy as a whole. As the digital landscape continues to expand, it is essential for governments, fintech companies, and individuals to work together to combat identity fraud and protect sensitive information.

Identity fraud has become a global crisis, with the Middle East and Africa region particularly affected. IBM's 2024 X Force Threat Intelligence Index reports that cybercriminals are exploiting user identities to compromise enterprises globally, with valid local accounts and valid cloud accounts being the primary cause of cyberattacks against organizations.

Nigeria's digital landscape is rapidly expanding, with an estimated 83 million internet users and a projected 48% increase by 2027. The number of smartphone users is also expected to rise to over 140 million by 2025, making the country a prime target for fraudsters. Jessica Ayodele, an X user, reported that"three people in my circle had their identities impersonated in just two weeks, with criminals using their real names to open accounts and commit fraud."

In response to the rising fraud cases, the Central Bank of Nigeria (CBN) has issued a directive imposing significant restrictions on Tier 1 bank accounts without a Bank Verification Number (BVN) or National Identification Number (NIN). The Fintech Association of Nigeria (FintechNGR) also plans to unveil a fraud reporting framework this year to combat the issue.

Why this matters: Fintech platforms like PalmPay are taking proactive steps to protect their users from fraudsters. PalmPay has implemented various security features, including in-app multi-factor security authentication for real-time continuous monitoring and analysis of fraud threats, a customer support team with over 300 representatives to resolve issues within 24 hours, and the "1 Million Shield" feature that provides enhanced coverage of up to N1 million annually and up to N50,000 per transaction for any loss due to unauthorized transactions.

Temitayo Oduwole, Head of IT and Payments at PalmPay, emphasized the importance of prompt reporting, stating, "Only 33 percent report the same day or take the necessary right action on the same day. Effective investigation into incidents of fraud begins when the user reports to their bank that fraud has occurred."

As Nigeria continues to grapple with the surge in identity fraud, the collaborative efforts of regulatory bodies, fintech companies, and increased digital literacy among the population will be crucial in combating this growing threat. With a 325% increase in fraud loss via internet banking and the rapid expansion of the country's digital landscape, swift action androbust security measuresare essential to protect Nigerians from falling victim to cybercriminals.

Key Takeaways

• Nigeria sees 325% increase in fraud loss via internet banking between 2022 and 2023.
• Poor digital and financial literacy among Nigerians makes them vulnerable to cybercriminals.
• Identity fraud is a global crisis, with the Middle East and Africa region particularly affected.
• Nigeria's digital landscape is rapidly expanding, making it a prime target for fraudsters.
• Collaborative efforts and robust security measures are essential to combat identity fraud in Nigeria.