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Banks to pay for card frauds abroad – CBN

By on January 21, 2015

The Central Bank of Nigeria on Monday ordered banks in the country to prevent payment cards (debit and credit) issued by them from working in fraud-prone countries, including the United States of America, South Africa and China.

The central bank also said that henceforth, the banks would be liable for frauds committed abroad using cloned cards belonging to their customers.

The PUNCH had exclusively reported on Monday that some of the banks had blocked their payment cards from working in the US, China and other fraud-prone countries, following the spate of electronic and Automatic Teller Machine card-related frauds.

The CBN, in a circular to the Deposit Money Banks on Monday, said from February 1, 2015, the banks must stop the payment/ATM cards from working in non-Europay, MasterCard and Visa countries.

It directed the banks to only activate the cards when customers to who the cards had been issued were travelling abroad and this should only be for the period that the customers would spend overseas.

The circular, signed by the Director, Banking and Payment System, CBN, Mr. Dipo Fatokun, read, “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.”

On Monday, the PUNCH exclusively reported that rising cases of electronic frauds, especially ATM-related scams, which had made Nigerian DMBs to lose billions of naira in recent times, had forced some of the lenders to prevent their payments cards from working in the US, China and a few other countries.

It was gathered that the banks took the action following the huge amounts they were refunding to their customers who had lost money in payment card-related frauds.

According to CBN statistics, the banks lost N40bn to electronic frauds in 2013 alone.

However, findings showed that prior to the recent deactivation of the payment cards from working overseas, refunds made by banks to customers who were victims of cards frauds were in excess of N1bn.

One of the ‘Systemically Important Banks’ made refunds in excess of N200m in 2014, it was learnt.

The PUNCH had in August last year exclusively reported that electronic fraudsters had been duplicating payment cards belonging to Nigerian bank customers and using them to buy items worth millions of dollars from shopping malls in the US.

The development had forced top executives of the banks and senior officials of the CBN to meet with the Economic and Financial Crimes Commission sometime last year in order to stem the tide.

 

[Punch]