CBN policy fails to protect bank customers regarding online transfer fraud

The Central Bank of Nigeria (CBN) has set a new guideline absolving commercial banks and payment service providers (PSP) of responsibility in situation where a customer making a transfer from N1million and above suffers a fraud.

According to the policy, banks and PSP, like Remita, Quickteller e.t.c, are required to issue customers indemnity forms for such a transaction, described as highly secured online fund transfers.

This means that a bank customer must undertake to bear solely any risk arising from such fund transfer.

“Accept indemnity from customers for highly secured online funds transfer above N1m for individual and N10m for corporate, subject to a maximum of N25m (individual) and N250m (corporate)”, the CBN stated in the guideline.

The indemnity may be “electronic or paper based on the customer’s preference”.

The banks and PSP are also told to “implement electronic indemnity with stricter controls requiring biometric verification of identity, and to “adhere to multiple factor authentication” for the specific fund transfer type.

Moreover, the banks and PSP are to “inform and educate customers on the use of indemnity to increase transaction limits where possible.”

Consumertrics reports that there have been rampant cases of online fund transfer frauds, many of which are usually unresolved even after customers’ lodge complaints to both the sending and receiving banks. In many of such cases, victims become weary of unhelpful bank officials, unending redress process, or because they lack knowledge on what to do.

The country’s low financial literacy highly contributes to why many consumers of banking services do not have the requisite information on bank products. It is also the reason many bankable Nigerians are still unbanked.

Beyond those challenges, Nigerian consumers are poorly protected due to regulatory laxity and weak implementation of consumer protection laws.