According to EFInA’s 2023 Access to Financial Services (A2F) survey, financial inclusion in Nigeria has reached 74%, with nearly 90% of the recent gains driven by fintechs. However, this growth has been accompanied by a concerning rise in scams and fraud, posing a significant threat to consumer confidence and the broader digital finance ecosystem.
The A2F survey found that 6% of Nigerians reported losing money due to card or PIN-related fraud, while 2.3 million adults experienced fraud at the hands of financial agents. These figures reflect just a fraction of the problem. Ponzi schemes and “get-rich-quick” scams remain rampant, with estimates indicating that they have caused $500 billion in losses across Africa—half of which are concentrated in Nigeria, Kenya, and South Africa.
Low digital and financial literacy of many users, particularly those who are new to formal financial services, makes them vulnerable. But more importantly, behavioural and psychological triggers—urgency, social proof, and perceived authority—are deliberately exploited by scammers. Fraudsters craft messages appearing to come from trusted institutions, family, or friends. These messages are often designed to create panic and prompt impulsive decisions, like sharing OTPs, transferring money, or clicking on malicious links. There is also the role that authority bias plays— a situation where fraudsters impersonate reputable brands, regulators, and/or government agencies to promote fraudulent schemes.
Surprisingly, it’s not just the financially vulnerable who fall victim. A growing number of digitally savvy young Nigerians are also being targeted. While this demographic is often assumed to be more tech-aware, their heavy social media use and appetite for fast financial returns make them particularly vulnerable.
Scammers advertise fraudulent investment opportunities through WhatsApp, Instagram, and Telegram with fake testimonials, celebrity endorsements, and offers that are time-bound.
These schemes typically promise unrealistic returns through forex trading, crypto assets, or real estate, exploiting the frustrations of youth facing high unemployment and limited economic prospects. Many young people share these opportunities with peers, unknowingly spreading scams within their social networks. Alarmingly, EFInA’s data shows that over 40% of youths rely on informal sources for financial information, making them more susceptible to misinformation and exploitation.
While education is essential, it is not enough. A complex mix of behavioural, social, and digital factors means that a multi-layered response is required. Technology offers powerful solutions for early detection and protection. AI-powered anomaly detection can flag unusual transaction patterns, while machine learning models can identify phishing attempts and block threats in real time. Regulators equipped with real-time dashboards can monitor patterns across institutions to identify coordinated fraud campaigns early.
Yet another major barrier is under-reporting. Many consumers never report scams due to shame, embarrassment, or the absence of clear complaint mechanisms. Behavioural studies show that victims often blame themselves or feel too humiliated to speak out. This silence allows scams to spread unchecked. Regulators, fintechs, and industry associations must work together to build strong grievance reporting and redress mechanisms that are user-friendly and transparent. Mandating public reporting of scam types and frequencies can help both consumers and providers understand evolving risks.
Industry associations can also play a key role by educating their members, aggregating scam intelligence, and facilitating proactive fraud prevention campaigns and information for consumers. The ecosystem must collaborate to develop and implement verified sender frameworks (VSFs) to strengthen caller ID and email authentication using protocols.
RegTech (Regulatory Technology) and SupTech (Supervisory Technology) are rapidly emerging as critical tools in the fight against scams. RegTech solutions enable financial institutions to automate compliance processes, monitor transactions in real time, and quickly adapt to evolving fraud typologies without overburdening their operational teams. AI-powered transaction monitoring platforms have become significant in flagging suspicious patterns and automatically generating regulatory reports and reducing the lag between fraud detection and intervention.
On the other hand, SupTech empowers regulators themselves with advanced data analytics and visualization capabilities, enabling them to spot systemic risks, track emerging scam networks, and proactively issue guidance to the industry. By embedding RegTech and SupTech into national payment systems and supervisory frameworks, regulators and providers can create a dynamic, adaptive shield that not only responds to fraud but anticipates it, ensuring that consumers are protected in an increasingly complex digital financial ecosystem.
To protect consumers and build long-term trust in digital finance, we must embrace a mix of behavioural insight, regulatory innovation, and advanced technology. We have made enormous gains in facilitating access to digital financial services, but to safeguard these gains, we must act quickly and collaboratively against those who exploit the very systems designed to empower.
Sarah Corley is the Chief Executive Officer of Alliance DFA, a network of digital finance and fintech associations driving innovative, responsible, and inclusive digital financial services across the world.
