SPECIAL REPORT: How PoS Frauds Put Vendors, Customers on Edge in Niger, FCT

SPECIAL REPORT: How PoS Frauds Put Vendors, Customers on Edge in Niger, FCT

By Kabir Abdulsalam and Abass Badmus

Abdulrazaq Siraja, a graduate of Information Technology from the Federal University of Technology, Minna, FUTMinna, is one among millions of Nigerian youths involved in the business of Point of Sale (PoS) mobile banking.

But he operates his PoS ‘job’ through a third party – a young lady he employed to work for him.

Lucky to have his kiosk at kwamba area of Suleja, a densely-populated town in Niger State, where his services is immensely required, Siraja is realizing huge profits, and smiling to the bank.

It is however not entirely a fairy tale for the FUT Minna Information Technology graduate.

He told PRNigeria that he has equally lost huge amounts of money to robbers and fraudsters, who rob him and also perform fake cash transactions with Chika Nwendi, the female agent running his PoS business.

Recalling an incident where a ‘scammer’ defrauded Nwendi, Siraja said: “Sometime in January last year, two boys came to my PoS kiosk to deposit N100,000 into another account.

“It was my shop attendant, who is helping me manage the PoS business, that attended to them.

“She was given a bundle of N1,000 notes. She confirmed the money, and noticed that the money was incomplete. She then returned the money for them to confirm”.

According to the FUT Minna graduate, who hails from Kogi State, “The boys gave her a similar bundle of N100,000 of N1,000. After counting and confirming the amount of the money, Nwendi put the bundle of N1,000 inside her drawer, and then they (the boys) left my shop.

“But reality dawned on her few hours later, when she wanted to audit her daily transactions. Nwendi discovered that the bundle of N1,000 notes also had N100 notes. What the boys smartly did was to cover the inside of the N1,000 notes they gave my PoS agent.

“They put N1,000 note at the top and bottom of the bundle of N100,000 they gave my PoS agent. Then, in the middle of the bundle were just N100 notes”.

Siraja, it was gathered reported the incident to Manager of the Suleja First Bank Branch, who asked him to send pictures of the money (brought by the two fraudsters) and a court affidavit, so that he (the Bank Manager) can freeze the account Siraja deposited money for the scammers.

Few days after, it was discovered that the bank account which Siraja had transfered the N100,000 to (for the fraudsters) belonged to another PoS operator in kano.

“Over there in Kano, another PoS vendor by name, Musa Aminu, raised an alarm that his bank account was frozen. Aminu then visited the bank, and he was informed about the fraudulent transaction that occurred on his account, from my own end in Suleja.

“The two boys that defrauded Aminu in Kano were working in concert with the two boys that also scammed my Pos agent in Suleja.

“After the first two guys had succeeded in defrauding my PoS girl, their partners in Kano went to Aminu’s PoS stand. They told him their uncle wants to send them money to purchase some items, there in Kano.

“Aminu gave them his account number. And within a short period, he received an alert of N100,000. He gave them the cash, and removed his transaction charges,” Siraja further noted.

Seeing that nothing can be done to retrieve the ‘stolen’ money, Siraja and Aminu were told by the Suleja First Bank Manager to jointly share the ‘loss’.

The PoS operator in Kano was asked to give Siraja N50,000, while he – Siraja – will raise N37,000 for himself, as the entire money they (the two swindlers) gave his PoS shop attendant was N13,000.

“After the incident, I wasted no time in firing my PoS girl due to her negligence,” Siraja said.

About PoS

Nine years ago, the Central Bank of Nigeria (CBN), in 2013, officially introduced the PoS banking system, as part of deepening financial inclusion among Nigerian citizens, while also implementing the Federal Government’s cashless economy agenda.

PoS banking is convenient, and time-saving. But before its advent, Nigerians often queue at banking halls for hours to withdraw money or carry out other vital financial transactions.

The PoS business, aside been lucrative also provides jobs for millions of unemployed youths, in the country.

There are about 307,000 PoS machines in Nigeria, with about 30,000 Automated Teller Machines, ATMs, and over 6,000 bank branches.

Findings also showed that PoS transactions carried out in the first eight months of 2021 stood at N4.06 trillion, representing a 45 percent increase, compared to the N2.81 trillion recorded in the corresponding period of 2020.

Experts’ Worry on PoS Banking

Despite its benefits, experts are worried over the proliferation of agent banking outlets, due to rising frauds perpetrated by PoS agents and even some customers, combined with the poor regulation of their activities by commercial banks and key financial institutions, in the country.

Bitter Tales of PoS Customers

It is not only PoS business operators that have bitter tales to share of how they were defrauded by criminals at some point, the customers, too, have theirs.

PRNigeria gathered that many PoS customers have experienced a situation where money in their bank accounts where ’emptied’ after patronizing some PoS vendors, offering agent banking services.

A cross section of them, told PRNigeria how fraudsters used their ATM cards details to defraud them.

Mr. Mathew Okeke, a customer, shared his ugly experience to one of our PRNigeria reporter.

After making a cash transaction at a PoS shop in Suleja, last December, he said his ATM card information was extracted and used to fund a Betnaija account.

“I was confused and suddenly began sweating, after I woke up the next day to see several debit alerts on my phone,” he added.

According to Okeke, a trader, he had first withdrawn N10,000 from his account, at a PoS stand on Saturday, 11 December 2021, with the transaction successfully performed.

“But at about 1:23am the next day, I received several debit alerts from my account. The money meant for my clients were entirely withdrawn. In all, N234,000 was debited, and the account was left with just N560.

“When I took my complaint to my bank branch in Suleja, I was told by the Manager that my card details had been compromised and used online to fund a Betnaija wallet,” he said.

Solutions for PoS Fraud

Wondering how customers’ bank details are easily obtained after transactions in some PoS machines, an IT expert, Ali Isa Musa, emphasized the need to upgrade the PoS software regularly.

Ali said: “PoS merchants, operators, and users must be wary of emerging trends in PoS fraud, to avoid been scammed”.

On his part, Mr. Olabode Dambola, an Abuja-based banker, expressed dismay over the rise in hacking of banking codes and networks, by internet fraudsters.

He said: “Another mistake is using a corporate network for sending security and system updates to all PoS devices.

“This is a common practice that puts a lot of businesses at risk. It is extremely easy for hackers to gain access to computers, networks, and PoS systems when corporate networks are not protected by professional security set-ups”.

To tackle PoS frauds, Dambola, said ATM cardholders should be sensitized on PIN handling, while appealing for proper and regular training of PoS aggregators and agents.

“All PoS devices must not be data retractable”.

Clampdown on Illegal PoS Agents

A PoS vendor in Kubwa – a satellite town in the FCT, Mr. Akintayo Segun, 31, lamented the increase in frauds perpetrated by swindlers and fake money agents, using PoS machines.

“There should be a clampdown on illegal PoS operators who defraud innocent customers.

‘We want CBN to deploy sophisticated technological devices to track these wicked people.

“Also, the government should subsidize for us, smaller CCTV cameras, that we can mount at the front of our business kiosks, to capture criminals, that will visit PoS vendors, with the intention to defraud them.

“This will also help security agencies track PoS-crime perpetrators,” he said.

Regulating PoS Activities

Recently, a federal lawmaker, Mr. Jimoh Olajide, advocated stringent regulations to guide the activities of PoS agents.

Jimoh said, “The House of Representatives is concerned that presently, no financial regulatory body in Nigeria can precisely ascertain the total number of PoS machines and their operators in the country”.

But reacting, Chairman of the Association of Mobile Money and Bank Agents in Nigeria, AMMBAN, Mr. Victor Olojo, expressed dismay over the statement credited to Hon. Olajide, on the absence of guidelines regulating PoS operations in the country.

Olojo however, called on licensed PoS operators to effectively implement the operational guidelines formulated for them.

According to him, the enforcement of the regulations guiding their industry is long overdue.

“There are CBN guidelines regulating our business through Licensed Financial Operators”.

No Response by CBN

Our reporters made several attempts to find out what the Apex Bank is doing to curb frauds perpetrated through PoS transactions.

But CBN spokesman, Mr. Osita Nwanisobi, did not respond to several calls one of our reporters put to his mobile line.

He also did not reply the SMS and WhatsApp chats of our reporters, at the time of filing this report.

This report is produced with support from the Wole Soyinka Centre for Investigative Journalism (WSCIJ) under the Collaborative Media Engagement for Development Inclusivity and Accountability project (CMEDIA) funded by the MacArthur Foundation