Guide To Nigerian Online Financial Scams

Proshare

Tuesday, July 02, 2019  / 07.15PM  / Nifemi Taiyese for Proshare WebTV / Header Image Credit: Bizenglish

 

What is an Online Scam

Online scam mean fraudulent online business scheme, that occurs in cyberspace. 

Online scams are dishonest schemes that seek to take advantage of unsuspecting people to gain benefit(s). 

According to Wikipedia Internet fraud is a type of fraud or deception which makes use of the Internet and could involve hiding of information or providing incorrect information to trick victims out of money, property, and inheritance. 

VeriSign,  Inc.,  ranked  Nigeria  3rdin the total number of Internet fraud transactions, accounting for 4.81% of global Internet fraud.

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History of Online Scams In Nigeria

The history of online scams in Nigeria is traced to the "Nigerian Prince Scam" scheme now known as 'Nigeria 419' because the first of its kind was from Nigeria, it is one of the oldest scams on the internet, but now these scams come from anywhere in the world. Nigeria has earned a reputation for being at the center of email scammers. 

The term '419' is coined from section  419 of the Nigerian criminal code (part of Chapter  38: Obtaining Property by false pretences; Cheating) dealing with fraud.

 

Types of Online Scams in Nigeria 

  • Advanced fee/prepayment scams
  • Anti -Virus scam
  • Charity Scam
  • Emergency Scam
  • Employment Scam
  • Extortion
  • Fake Check Scam
  • Grandparent Scam
  • Identity Theft
  • Immigration Scam
  • Internet Purchase Scam
  • Lottery/Prize Scam
  • Social Networking Scam
  • Relationship Scam
  • Phishing


These are some of the types of scam from Western Union; more can be got from the site. Source Western Union Read More

 

Reported Cases of Arrest and Lessons Learnt

The Nigerian Criminal Code deals with the definition of offences, the charges and relevant punishments for offenders.

From Daily Trust, Economic and Financial Crimes Commission recovered two hundred million naira from Swiss Golden Investment a Ponzi scheme after the commission received petitions from thousands of complainants scammed, a Russian and two Nigerians were arrested. Read More 

In the International Business E-mail Compromise takedown coordinated by the FBI and other agencies, there were 74 arrests made; 42  in the U.S. 29 in Nigeria and three in Canada, Mauritius and Poland. Source FBI News Read More 

A 24-year-old Nigerian man took the identity of a 58-year-old Danish man and scammed 62-year-old Maria Grette with the romantic scam. Source BBC News Read More

 

What to do About Such Scams

Proshare WebTV engaged Nigerians on what they think can be done to curb these online financial scams. 

Mr. Temi Supoolu is of the view that most Nigerians need to be sensitized on how to keep their bank information safe and personal. He also said that Nigeria, as a country, needs a tighter legal system with more laws and proper enforcement put in place.  According to him Cyber Securities Act, Data Protection Act and EFCC Act are not enough more Acts should be put in place. 

Mr. Nnamdi Ugochukwu said that this could be grass root addressed, with government authorities and bodies creating capital punishment and zero tolerance to the corruption of any sort. 

According to Mrs. Erinayo Adesola, a  body should be put in place to curb this act, with officials that are disciplined to serve as operators. She also states that the government should monitor the inflow of people's account and create a wall to block cyber- crimes. She stated that in curbing online scam, the government should focus on human capital development.

 

List of Ponzi Schemes in Nigeria and Websites Used

Ponzi Scheme is an investment fraud that pays existing investors with funds collected from new investors. To understand Ponzi scheme Read More 

Ponzi scheme is named after Charles Ponzi who became known for his elaborate scam in 1920's. 

BTC Investments, MMMBTC Online, Donation Hub, Naira Donation, Zigma, 247Helpers, Foster Funds are some Ponzi schemes that can be trusted according to Current School News 

Some Ponzi schemes that made headlines in Nigeria are The Mavrodi Mundial Moneybox popularly known as (MMM) 2015 that crashed barely a few years ago is succeeded by yet another Ponzi scheme known as Loom Money Nigeria 2019. 

According to Daily trust, in 2017, the Nigeria Deposit Insurance Commission (NDIC) said Nigerians lost N18 billion to MMM, with over three (3) million participants.

Source Pulse News 

Also the Old and still consistent "Nigerian Prince" online scam, according to CNBC rakes in $700,000 to the detriment of victims, mostly Americans. https://www.cnbc.com/2019/04/18/nigerian-prince-scams-still-rake-in-over-700000-dollars-a-year.html

 

PONZI Loop

In buttressing the impact of schemes like the "PONZI" which are also mostly domesticated online, we developed an infographic to explain the pattern of how Nigerians lose massive funds, from an unregulated financial scheme. 

Whether it is the defunct MMM, current LOOM and any other planned PONZI scheme, the platforms are profitable for the first set or what you call early investors.  Secondary investors also make money but not as much as the early investors, while the third phase of investors is the risk-prone ones who stand to lose everything. 

The Chain starts with the Early Investors, continues with the Secondary Investors and breaks down with the Third set of investors who are 'Tail-End Investors.'

Proshare Nigeria Pvt. Ltd.

 

Regulatory actions to date

The Central Bank Of Nigeria (CBN), the leading financial institution in Nigeria has a CBN Email Disclaimer on their official website that warns people of fraud. The CBN has compiled a list of frequent scenarios and what you should do in each situation. Source CBN Read More

The Economic and Financial Crimes Commission (EFCC), has made available on their site a scam and safety information segment that enlightens people on online scams and how to prevent them from being victims. Source EFCC Nigeria Read More 

Securities and Exchange Commission (SEC) published a release which is still on the internet to date that serves as a guide to the public on what to watch out for in identifying Ponzi schemes. Source Proshare 

Whenever any online financial scam is becoming popular, the regulators always come out to give a statement or press release to prevent Nigerians from falling prey into such fraudulent activities to date.

 

Conclusion

Financial Online Scam is a major concern for the global community, and every person should be abreast of these scams with how best to avoid them and not be a victim. 

The 2018 PricewaterhouseCoopers, PwC survey revealed that 49% of global corporations said they had been victims of fraud and economic crime. 

The Financial Conduct Authority of the United Kingdom disclosed that investors lost about 197m pounds to investment scams. Read More https://www.ft.com/content/96a146dc-295e-11e9-a5ab-ff8ef2b976c7 

Regulatory bodies in the financial space take certain measures to ensure that they provide their consumers with the information need protection from scammers. 

Citizens should be aware that investments not registered with the state or national regulators like the Securities and Exchange Commission are considered Ponzi schemes. 

Most Ponzi schemes that were available have their websites down and no longer exist. 

Before one becomes defrauded from the online scam, these are intervention solutions on how to break the cycle represented in the chart below; 

  • Institutional intervention
  • Public Enlightenment
  • Digital Intervention
  • Arrest Scheme Initiators if possible 


Proshare Nigeria Pvt. Ltd.


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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

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