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Police, banks helpless, as online loan fraud emerges

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By Elizabeth Adegbesan

The emergence of online loans accessed through digital platforms of banks and financial technology companies, Fintechs, may have provided new opportunities for bank customers.

But it has also opened them up to new fraud— online loan fraud.

Vanguard Money Digest investigations revealed that criminals who steal phones can now make quick online borrowing from the bank of the victim.

A victim with name  Emmanuel Odoemelam, spoke to Vanguard Money Digest narrating his experience with the fraudsters who used his SIM card to access loan from his bank.

He said: “My phone got stolen and later that evening around 7pm,  N50,000 was moved into my bank account. The thief started withdrawing the money gradually.

“I made a complaint to the bank the next day and the bank asked me to make a police report, which I did.

“I returned to the bank and they assured me that the problem had been sorted out. Then I blocked the line.

“A month later N50,000 was deducted from the account. I lunched a digital investigation into my phone and my account and found out that the SIM was used to access an online loan from my bank.

“The loan was the N50,000 credited to my account. This is an account that has never been used to borrow online loan. How on earth can someone have access to my account through a SIM card I never used to carry out any bank transaction?

“Even the phone that was lost had no information on it because it was new. Whose PIN, BVN, or data did they use?

“For now, I don’t put any money in that account. My annoyance is that I reported to the bank, the bank said everything is fine. Now they are telling me stories. That is not proper.

“When I reported to the police they collected my statement and I paid for the police report. They gave me a number of the complaint I lodged in.”

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Bank official speaks

Speaking to Vanguard Money Digest on the development, a tier-1 bank customer service manager who spoke on condition of anonymity said that the problem of fraud cannot be eradicated as most of the online platforms do not need facial recognition before they are assessed as long as the adequate information are imputed it responds to the transaction command.

He said:  “Most of the banking population are not tech-savvy. So these things are loopholes for fraudsters to come into.

“What I observed also is that most of these fraudsters have a lot of IT knowledge and ex-staff that were retrenched from either banks or Fintech companies are involved. So they have lots of information.

“Now what we do is, when a bank customer reports a stolen or missing phone, we block your account and deactivate all his digital banking. Once we do that, it takes a month or two for the customer to activate the platforms.

“This is because it takes the system a while before it can reassign another profile for the customer. If you do not compromise, there is no way this people can get you. They must get either your phone SIM or Automated Teller Machine (ATM) card.

“That is why I said all those online platforms we are using it doesn’t have facial or print recognition as long as you input the correct information.”

Police Commissioner

Speaking at a conference in Lagos, the Commissioner of Police in charge of Police Special Fraud Unit, Lagos, Kabiru Ibrahim, represented by the Assistant Commissioner of Police, Gbenga Adeoye, said the rise in fraud in the country is due to the ease of committing the crime and that financial fraud and identity theft are not primary crime.

He said: “The ease of committing this crime is why it is on the rise because of the low risk of committing the crime and the fact is that even if they are caught, there is no tendency for them to be injured. It is not like arm robbery, where if you want to rob a bank you will know that either you are killed or you have to kill. But these people can just do whatever they want to do.

‘‘We should also know that financial fraud and identity theft are rarely a primary crime. They are always attached to an initial crime. Before they are committed, they must have been theft of a wallet, personal identities, financial information, either on email or when people’s houses are bugled computers will be stolen, phones will be stolen, identities will be stolen from them.

“So investigators must have noted that vital cause between these kinds of crime.’’

But the Police appear ill-equipped to fight the crime

Adeoye stated: “Why are we having issues about fighting this crime?  Of course, the law enforcement agency will be the first point of agencies to be blamed, but no we have inadequacies and there is no funding.

“We have a barely minimal number of trained and experienced investigators that are working with sparsely law enforcement equipment.

“How about a lack of co-operation and commitment among stakeholders? All these complicate an investigation and persecution of perpetrators of mobile money fraud. The processes that we take in the investigation can be cumbersome, time-wasting and can affect investigation.

“We have to write to the court asking for warrant, asking for orders to get into people’s account and even at that also having to write to some telecom industry has become a lot of issues in the past, of course, I agree to the fact that insider abuse might be responsible for that in the law enforcement agencies and even within the organization that are involved.

“Now we can no longer write but to pass our writings through a specific branch of the Force, which can waste a lot of time, and again when these people are now eventually charged to court.

“The kind of light bailing condition that the court will give them and the general slow judicial processing that we have that will make them come out and still commit a similar crime again, they are all militating against the  fight on mobile money fraud.”

Explaining the process for assessing online loans from a bank or fintech and how bank customers fall victims of fraudsters, the Customer Care Manager said: “For you to access an online loan, you need your BankVerification Number (BVN) and if you don’t pay back, they blacklist your BVN.

“When your phone is stolen and you receive an alert in that phone, it is as good as giving out the right to your account. Anything you can do on your account they can do.

“If your phone is stolen and you report to the bank after four to five days those guys would have done what they want to do. In fact, they do it within hours. If you report at that time (after days) and the bank say they have blocked the account, that is medicine after death.

“The things those guys now do is that they take the phone especially that of people they are close to and clone the SIM. Give you the cloned SIM and keep the original. So you just find out that you are not getting calls or text messages.

“You will think it is your network but those guys will be doing what they are doing. It will take a long time for you to realise what is happening.’’

Vanguard

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