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Cloned Nigerian ATM Cards: CBN Bars Fraud-Prone Countries

Credit: Wiki edited by MBW

Central Bank of Nigeria has stopped payments cards from working in the United States, China, South Africa and other fraud-prone countries that may emerge as the wave of payment fraud continue to blow across the Nigerian banks. 

 

Earlier, some Nigerian banks had blocked their payment cards from working in the Automated Teller Machine fraud-prone countries following the rise in electronic scam.
Cloned payments cards aren’t peculiar to Nigeria alone; it’s a world problem for banks that do not properly protect their payment cards, or banks that have some officials as 419 informants.

The loss accrued to the e-fraud in Nigeria since it started has been enormous. CBN statistics says banks lost N40bn to electronic frauds in 2013 alone.
What is Credit Card Clone?

Also known as Credit card “skimming” credit or debit card cloning is an electronic-fraud technique whereby someone obtains your credit card or debit card details, copies the crucial details onto a bogus card and begins to use the credit card. It means any withdrawal made on the bogus card is debited to your account.
How credit or debit cards get cloned could be a mystery to the victim, but it’s a systematic fraud perpetrated within seconds by the thieves.
How Nigerian ATM cards are being duplicated and used in the US

“In Nigeria, we use chip and PIN, but the US still uses magnetic stripe. So, what those fraudsters do is to get the details of a customers’ ATM card, duplicate it and then go to shopping malls and start using it to buy items.
“When they are using the PoS in US shopping malls, all they do is to swipe the card and then payment is made. They don’t need to put any PIN. Through these, items are bought using Nigerian ATM cards,” a financial security expert said.
Banks and not customers will be liable-CBN

Nigeria’s apex bank CBN handed down a warning to financial institutions in Nigeria that they would be responsible for any fraud carried out abroad using skimmed cards belonging to their customers.
The CBN, in a communiqué to Deposit Money Banks signed by CBN’s Director of Banking and Payment System, Mr. Dipo Fatokun, said on Monday that from February 1, 2015, the banks must stop the payment/ATM cards from working in non-Europay, MasterCard and Visa countries.

“The occurrence of card present fraud in non-EMV environments is on the increase, especially when international hybrid cards issued by Nigerian banks are used in non-EMV environments like the USA.
“It has, therefore, become necessary for the CBN to issue the following directives’ all DMBs should do the following: collate all their card frauds abroad and send to the CBN not later than January 30, 2015; subsequently, all data on card frauds  occurring abroad should be rendered on the NIBSS fraud portal; implement anti-fraud solution on their card management systems not later than January 30, 2015; ensure that from February 1, 2015, only customers that expressly indicated the intension of travelling to non-EMV jurisdictions would have their cards default to the magnetic stripe and for the period indicated by the cardholder only.
“To this end, banks should ensure that their customers are adequately educated; carry out regular awareness campaign to cardholders on tips to avoid fraud in non-EMV environment; ensure strict compliance on the PCIDSS and their vendors/partners involved in card processing activities; all the DMBs will be liable to make refunds on card frauds abroad except items II to V are fully complied with. Please be guided and ensure strict compliance with the content of this circular,” Mr. Dipo said.
How do you reduce clone credit cards?

Findings show that fraudsters have used cloned payment cards issued by Nigerian banks to buy goods in foreign countries, particularly US.

The General Manager, Visa West Africa, Mr. Ade Ashaye, was optimistic that new technologies could be employed to stop Automated Teller Machine-related fraud. He wasn’t specific about what technology to use.

But smart chip credit cards are one of the preventive measures against cloned cards. Smart chips are microchips implanted in some payment cards that encrypt the details contained in the magnetic strip which makes microchip to be extremely difficult to be changed or deleted.

This means that any fraudster who scans your card through the device will only get encrypted information which will be useless for use.
What about if the chip is disabled?

 If the chip is disabled, the new swipe terminals will alert staff to ask for an ID or decline the transaction.
 Action of Nigeria’s EFCC

In 2014, top executives of some Nigerian banks and senior officials of the CBN met with a team of Nigeria’s anti-graft agency Economic and Financial Crimes Commission operatives led by the director of operations in Abuja.
The collaboration was for the anti- graft agency to help in arresting some of the fraudsters who are using the duplicated ATM cards in the US.
It was gathered that the EFCC would also collaborate with the US government in order to effect the arrest of some of the electronic fraudsters.
Payment Cards fraud has insider link

We can’t rule out the fact that some bank officials are informants and cohorts of online fraudsters giving out sensitive details of their customers to e-fraudsters. Rich people are usually the target.
It was gathered that prior to 2010 when Nigerian banks were still using magnetic stripe for ATM cards; the issue of using Nigerian ATM cards fraudulently abroad was prevalent which prompted the banking sector to migrate to the chip and PIN system, the problem stopped just to pick within few years of adoption.
The Deputy Governor, Corporate Services, CBN, Mr. Adebayo Adelabu, last year linked the increasing frauds in the banking sector to several issues, including the banks’ poor recruitment procedures and failure to prosecute workers involved in fraudulent activities for fear of reputational risk.
Also, chairman, Chartered Institute of Bankers of Nigeria, Lagos branch, Mr. Abolade Agbola, linked the high incidence of electronic frauds to lack of integrity and poor staff conditions.
“When you see the fraud that happens and the trillions of transactions that take place daily, then I think the banks have to take the technology ahead, take the staffing ahead and then create a future for the members of staff so that they can know that they have a future in the organisations and that they can build a future,” Abolade said.

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