PoS scammers… clogging the wheel of digital transactions nationwide
Despite the economic gains that have come with the Central Bank of Nigeria’s (CBN) policies that enhanced the use of Point of Sale (PoS) machines for financial transactions across the country, the devious activities of scammers are discouraging many from making use of the technology in their business deals. In this report, OMIKO AWA x-rays the tricks of PoS fraudsters and experts’ views on how to beat them at their game.
The fiscal policy of the Central Bank of Nigeria (CBN) that paved way for the operation of agent banking in 2013 changed the nation’s financial landscape impressively. The policy ensured the extension of financial services to those who were, before then, unwittingly excluded from the conventional banking system.
Through the policy, the burden of rural and semi-urban dwellers that hitherto travelled long distances to access banking services was relieved. Point-of-Sales (PoS) businesses sprang up in villages/neighbourhoods that have internet access, empowering the people on one hand and providing financial services to them on the other hand.
Before long, PoS became the darling of the public, largely for enabling consumers to withdraw money at a very minimal commission when the nearest Automated Teller Machines (ATMs) or even banks are far away. It also saves bank customers from the long queues and irregular network challenges often experienced at the ATM points.
This encouraged many Nigerians to embrace it as an alternative means of receiving or depositing money into any bank account across the country as well as performing other banking transactions such as, paying utility bills for electricity and water; and buying of airtime and data, among others.
With high unemployment rate, low financial inclusion and inconveniences associated with traditional banking services, the PoS model is no doubt fulfilling its objectives – creating jobs for the youth, providing petty cash for small scale business transactions and decongesting the banking halls.
Despite the positive impact of the policy on the people and the economy, Nigerians are increasingly becoming apprehensive of transacting businesses via PoS machines. Some unscrupulous PoS operators now use the machines to defraud unsuspecting customers and many have fallen prey to them.
For instance, Babatunde Akinlaja, a Lagos-based businessman, went to Temitope Arowosegbe, a PoS operator, to withdraw N5,000, but the transaction was declined. In a short while, Akinlaja received a Short Messaging Service (SMS) from his bank that he had withdrawn the specified amount.
According to Akinlaja, he complained to the PoS operator, who asked him to take his complaint to the bank. But on getting to his bank, he discovered that the transaction in question was actually successful. So, why did the PoS operator say that it was declined?
Efforts to find an answer to the question took him to Pagatech Ltd, Yaba, the PoS operator’s head office, where the money was refunded after over nine hours of waiting and disputation.
“Imagine what could have been the fate of many other Nigerians that do not have the resilience to face the situation and reclaim their money. If things like this could happen in a city like Lagos, what would be the situation in the rural areas? It is not about N5,000, because by my standard, I can forgo the money. But we need to set a standard, build trust in our institutions and make this work. Can you imagine the number of people they would have swindled through this means? Do you know the rippling effect of this singular act of mistrust on the economy and small business owners that see the banks as time-killing institutions?” Akinlaja asked.
Akinlaja is not the only one that has faced this challenge. Vincent Kalu, a Lagos-based civil servant, lost N50,000 in similar circumstances, when he travelled to Umuahia, Abia State, for the burial of his mother and had to make use of the services of a PoS provider. The transaction went haywire and Kalu was not refunded till date.
Bejamin Ajie, who is based in Kaduna, also disclosed how he was defrauded of N20,000 by a PoS operator, who claimed the double dispensing he noticed on the machine was as a result of network disruption and that Ajie should go to his bank to sort things out by himself. Ajie actually did but the bank kept asking him to come back for account reconciliation until he lost interest in the case.
Madam Fausat Afinni told The Guardian that she had to engage a PoS operator in a fisticuff to take her N20,000, which the operator had claimed she would not dispense because a network failure had occurred.
Another victim of PoS fraud, Agnes Achie, wept bitterly when her bank account was hacked. She had visited a PoS point to withdraw N30,000 and after the withdrawal, she began to receive multiple debit alerts from her bank.
She said: “I wept like a baby when my account officer informed me that the alerts were not from the bank and that my account must have been hacked.”
A new dimension to the fraud being perpetrated through PoS machines is the introduction of mobility to the business.
By this method, instead of operating in a stationary kiosk, some fraudulent PoS operators become itinerant, moving from one location to the other in open markets, motor parks, fun centres, shopping malls and places where there is a huge crowd; advertising their services.
While this looks good for people in emergency situations that require immediate financial transactions, Madam Oladimeji of Ola Foods, who was recently defrauded of N100,000 at Ijora fish market, warned Nigerians to be wary of itinerant PoS operators.
Recounting how she was defrauded of N100,000 by a mobile PoS operator, she said: “I directed her to transfer N100,000 to my customer. While I was still standing with her, the money was transferred. But when I got to my customer, I discovered that the money did not get to him. I was worried and went back to the spot where I met the PoS operator only to find out that the lady was no longer there. The search party put up by some concerned people around achieved nothing; there was no trace of her.”
The Guardian, however, learnt that PoS operators also fall prey to fraudulent customers. So, just as customers are scammed, some also scam PoS operators.
A PoS operator, Tofeeq Animashaun, recounted how a young man came to him to withdraw N80,000.
He explained that the customer inserted his ATM card into his PoS machine but it was unable to process the transaction. He gave up after trying thrice. The customer then pleaded with him to allow him to transfer the said sum into his (operator) account and then give him the cash (customer).
He obliged, thinking that the customer was genuine not knowing that he had been scammed. He realised that the alert he received on his phone was fake when he reached out to his bank for a confirmation of the transaction after the customer had left.
“I called the phone number he dropped only to be told that I was not allowed to call the number. Subsequently, my phone continuously indicated network busy each time I dialed the number,” Animashaun recounted.
The ugly tales of some PoS customers have made some Nigerians to become wary of patronising PoS agents.
“I can hardly go to a PoS point to withdraw N20,000; I withdraw only the amount I can comfortably forgo whenever there is any issue. I have seen and heard people visiting their banks on different instances to reconcile their accounts over PoS transactions of N5,000 or N10,000, which to me, is not good for our economy,” said Alan Oyewunmi.
Oyewunmi alleged that some PoS operators were agents of fraudsters and could easily copy the number on an ATM card, which would enable them to hack someone’s account. Oyewunmi explained that the growing distrust in the system has resulted in some people preferring to use their banks’ apps to transfer money into the account of the PoS operators and wait for the agents to get a confirmation from their banks before taking their cash.
A web designer, Clem Obazie, told The Guardian that as the nation embraces cashless transactions, issues of fraud and distrust would continue to arise.
According to him, hackers find it very easy to infiltrate weak and unsecured networks and steal customers’ valuable information, such as credit card numbers, National Identification Number (NIN), Bank Verification Number and other business details. He revealed that Nigerians have to live with hackers for now, adding that cybercriminals access PoS systems through the use of a spyware called Black POS and POS malware.
According to him, these devices are installed on the card reader to capture information stored on a customer’s credit or debit card.
He disclosed that scammers use this information to carry out transactions as if they were the owner of the card and could clear the money in such an account.
Obazie also disclosed that PoS malware works in a destructive way by infecting the PoS terminal, thereby allowing the scammer access to sensitive information such as card numbers, expiration dates and security codes. He said the information obtained through this means is solely used to make unauthorised transactions and drain people’s accounts.
Cautioning PoS users to be mindful of where they make their withdrawals, the web designer revealed that a new machine known as Wallet PoS has been added to the number. He disclosed that the machine is cloned and comes with a memory card that can copy users details once a user enters his/her pin.
“Not issued by any bank or financial institution, this cloned PoS machine has the capacity to store information and any transaction done with it cannot be traced to any bank or financial house because it is not linked to any bank or financial institution,” Obazie added.
Lamenting the destructive impact of PoS fraudsters on the economy, George Aremu said losing one’s hard-earned money to scammers is painful and does not speak well of the nation’s financial system.
According to him, if the trend continues unchecked, it could cause people to lose trust in digital financial transactions, especially those who majorly see the PoS system as an alternative to the traditional banking system.
He also noted that crimes like this could make people jettison the nation’s cashless policy, calling on the government to build a viable security network to fight the menace.
What To Know
A computer engineer, Hilary Emevor, stated that not all PoS frauds could be traced to a bank or any financial institution because of the configuration of the PoS machine used to carry out the crime. According to him, there are two types of PoS machines – the traditional and the android. He disclosed that traditional PoS machines print receipts at the end of every transaction, successful or not, while android PoS machines only print receipts on successful transactions and this could easily be manipulated.
The computer engineer revealed that the android PoS machine is fraudsters’ favourite because it does not give out details of the transactions carried out on it and the SIM card attached to the PoS account with which the agent receives bank alert for every transaction could be different from the SIM card that is used to operate the machine. “So, this makes it very easy for fraudsters to manipulate and get away undiscovered,” he said.
He noted that a PoS machine fraud could only be traced if the SIM card in the machine is the same as the SIM card with which the agent receives transaction alerts from their banks, saying when a PoS agent registers with one telecommunication service provider’s SIM and operate the PoS machine with another telecom provider’s SIM, it becomes difficult to trace the crime because the SIM used for the crime will be removed and as such there will be no trace of the transaction.
To curb the dangers inherent in PoS transactions, he advised individuals to take responsibility for their own security by regularly checking their bank statements after every transaction, covering their keypad when entering pin numbers on PoS machines, asking and collecting print out receipts after every transaction even when the transactions are not successful.
He noted that other precautionary measures include “using an operator with a known stand, which you know to be trustworthy; watching how the operator enters his/her figures to avoid your number being copied and also avoiding using public Wi-Fi or patronising itinerant operators.”
For Joseph Amuda, a former bank manager, who currently deals on computer accessories, PoS fraud does not encourage trade, especially among small businesses because it bridges integrity and makes people lose money.
He said that to curb the crime, banks must play prominent roles. According to him, PoS crimes could be traced if the operator and the machines are properly registered, urging stakeholders in the system to verify PoS machines to know if they are all attached to a bank.
“To trace a PoS crime, all the bank needs to do is to trace the account number the operator registered it with, that is, if it is a machine registered with a particular bank. The whole process does not take more than two weeks from the date of complaint to the day the investigation will be concluded, which for some people is too long. The two-week window is to allow the bank to do a diligent work and feed back the customer. However, if after two weeks of lodging a complaint and the bank still could not resolve the matter, the customer has the right to escalate the complaint to the Consumer Protection Department (CPD) of the CBN.
“Again the bank is limited because it can only provide the name of the owner of the particular PoS in question or the name of the company that owns it. It does not have the powers to go beyond that and this is left with the customer or victim to take the information to the police for arrest and prosecution. But if it is a bank-to-bank transaction the fraudster has made, the bank would block the fraudulent account and put the person on a watch list or blacklist the customer’s Bank Verification Number (BVN),” he explained.
Amuda disclosed that most Nigerians see the process as cumbersome and time consuming; hence they fail to report their cases even when they are genuine. He added that such an attitude would never improve the system but would further encourage fraudsters to do more harm because they believe they would never be caught. He maintained that that reporting crime would help those in the sector to learn about it and then know how to curb it.
He called on the government, banks and financial institutions to invest more on security so that Nigerians could enjoy the benefits of digital transactions.
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