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An Assessment on the Activities of Fraudsters Using ATM Pin

An Assessment on the Activities of Fraudsters Using ATM Pin

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Reference ID: PS-355-TM


This research material titled “An Assessment on the Activities of Fraudsters Using ATM Pin” is dedicated to God for his enabling grace, and to all computer enthusiasts who contributed to make life a pleasant experience during my research documentation.


I extend my sincere gratitude to all those who contributed to the completion of this project. Special thanks to my Supervisor (Name of your Supervisor), the Head of Department (Name of your HOD), the Lecturers in the department of Criminology and Security Studies, Book Authors and Profound Scholars of existing or related project material on “An Assessment on the Activities of Fraudsters Using ATM Pin” for their invaluable guidance, support, and expertise throughout the journey.

I am also grateful to your study area (mention any funding organizations, if applicable) for their financial assistance. This research would not have been possible without the encouragement and assistance of some stakeholders (mention any mentors, teachers, or colleagues). Additionally, I would like to acknowledge the understanding and patience of my family and friends during this endeavor. Your unwavering support has been a constant source of motivation. Thank you all for being part of this meaningful endeavor.







    • 2.1 Introduction
    • 2.2 Conceptual Review
    • 2.3 Theoretical Framework
    • 2.4 Empirical Studies



    • 3.1 Introduction
    • 3.2 Research Design
    • 3.3 Population of Study
    • 3.4 Sampling and Sampling Technique
    • 3.5 Validation of Research Instrument
    • 3.6 Method of Data Collection
    • 3.7 Method of Data Analysis
    • 3.8 Questionnaire Administration
    • 3.9 Ethical Consideration
    • 3.10 Statistical Analysis



    • 4.1 Introduction
    • 4.2 Presentation and Analysis of Data
    • 4.3 Re-statement of Research Questions
    • 4.4 Test of Hypotheses
    • 4.5 Discussion of Findings



    • 5.1 Introduction
    • 5.2 Summary of Findings
    • 5.3 Conclusion
    • 5.4 Recommendation
    • 5.5 Suggestion for Further Study




    Automated Teller Machine frauds are illegalities connected to the businesses and operations on ATMs. This includes acts such as identity theft, pin misplacement, card theft, password hacking and electronic fund transfer. The aim of the study is to assess the Activities of Fraudsters using ATM Pin. In achieving this aim, the following specific objectives were laid out to know the relationship between ATM fraud and fraud, examine the ways by which these frauds are committed, and know the measures that central bank of Nigeria has taken to mitigate this fraud. The research design used in this report is descriptive design, utilizing questionnaire method to obtain information from the respondents for this project. A total of 150 (one hundred and fifty) respondents were selected for this study to represent the entire population of the study. For null hypotheses were formulated and tested using the one-way ANOVA and the t-test statistical tools at 0.05 level of significance. Three hypotheses was tested using the chi- square statistical tool and it was observed that there is a significant relationship between ATM fraud and fraud in Nigeria, it was also observed that ATM fraud affects customers patronage and financial institution growth. In conclusion, the activities of fraudster’s needs to be monitored and measures should be put in place to mitigate these frauds. To solve this, additional security layer on the ATM is recommended and proper monitoring of the ATM machine by the banks. We believe that if banks and service providers heed to some of these suggestions in this work, we will have a safer, hassle- free and worthwhile banking experience in this country.

    An Assessment on the Activities of Fraudsters Using ATM Pin


    1.1 Introduction

    Automated Teller Machine frauds are illegalities connected to the businesses and operations on ATMs. This includes acts such as identity theft, pin misplacement, card theft, password hacking and electronic fund transfer etc. Fraud is a major economic crime which has become one of the most intractable problems of modern day banking. Banking fraud is an international phenomenon which has become permissive, as the fraudulent become more sophisticated and dairy in their approaches. The act of fraud activities have led to serious crises and commotions in our various financial sectors internationally, of which the survival of many of our individual financial sectors and one stability of other financial sectors as a whole (Udenwa, 1998).

    As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.

    1.2 Background of Study

    Globalization and Information and Communication Technology (ICT) took the world by storm and this has posed great challenges to the banking industry. Information and communication technology has changed not just the business world but also the world we live in. it has changed the way things are done that today, no matter what you plan to do, whether you will work with people or money, with words or numbers, technology plays an important role. In fact, it has defined the world order with technological breakthrough and advances in telecommunications, speed of equipment and the use of computers, bankers can now use these same link to transmit data. This gives rise to electronic banking which is simply the application of information technology to transmit data from one point to another. The electronic delivery of banking services has grown rapidly in popularity that every bank now realizes that electronic banking has become a basic element of today's financial service delivery (Garuba, 2008).

    The global trend in socio-economic growth of countries around the world shows that a high premium is placed on information and technology by organizations, communities and nations. Development in telecommunications and communications networks such as the internet has transformed economic growth and wealth in many countries (Fasan, 2007).

    According to Heli (2006), banks and financial institutions all over the world were easily adopters of information and technology. Its use for providing services for customers stretches back to the early 80s when magnetic stripe cards where used to provide account services. This was followed in the 90s by the use of dial up access to customers account using software provided by banks in the last few years, and in particular with the wide spread adoption of internet by customers as well as business.

    According to Olugbemi (2007) Nigerian banks have started to offer wide range of its products to their customers making use of sophisticated technology. Financial institutions heavily utilize telecommunication as a tool in the efficient management of customers account, data base and transactions. The introduction of electronic banking introduced new legal element into the customer/banker relationship, issues of data securities, privacy, cyber-crimes, e- payment solutions, electronic records, digital/ electronic evidence etc.

    According to Luderman (2009), technology has transformed many sectors, the use of technology in banking has brought banking transactions close to their customers. Before the advent of banking reforms in Nigeria, it was frustrating doing business with banks, customers go through hell even when they transact simple banking business, but recently, the use of information and communication technology has dominated the world through the use of electronic banking, banks and other financial institutions use this medium to offer a wide range of bank services from account services and customers relations to selling of various financial products. Transaction can be carried out by Nigerians using their debit card or credit cards.

    According to Heli (2006), electronic banking is one area of e- commerce that has proven successful in Nigeria, virtually all banks in Nigeria offers online and real time banking services. Moreover, banks in Nigeria that cannot offer these services are increasingly losing their customers, however, one way where by transactions are more easier is the use of the automated teller machine (ATM).

    According to peter and Sylvia (2008), an automated teller machine (ATM) combines a computer terminal, record keeping system, card cash vault in one point, permitting customers to enter a financial firms book keeping system with either a plastic card containing a personal identification number (PIN) or by punching a special code number into a computer terminal linked to the financial firms computerized records 24 hours a day.

    ATM is a computerized telecommunication device that allows customers of a bank or financial institution with access to financial transactions, sometimes in locations outside the banking halls, minimizes risk associated with large movement of cash and eases payment of bills, taxes, utilities etc. it usually contains a magnetic strip that stores account information's.

    Since 2007, with increased advancement in technological awareness, all banks in Nigeria have resulted to installation of automated teller machines(ATMS) in their banks to ease the human trafficking in the banking halls. Indeed as from 2008, most, if not all banks made it a regulation in their banks in Nigeria that all customers withdrawing a certain amount of money should do so through their ATM.

    According to Santiago and Francisco (2008), recently, most shopping plazas and eateries have ATM installed in their outlets for easy accessibility of cash to their customers; some of these outlets uses point of sales (POS) to settle their customers purchases. It can therefore be easily and safely concluded that the use of ATM has become imperative and rampant within the Nigerian landscape. Currently, Nigeria has about 7300 automated teller machines (ATMS) installed in various bank branches and off bank premises such as shopping malls across the 36 states of Nigeria and connected to the interswitch network. These are currently about 28million Nigerians using the cards at various ATMS deployed by the banks in the last three years, which makes Nigeria one of the fastest growing ATM markets in Africa.

    However, although many Nigerians have accepted and commended the innovative e- transact for the elimination of human bureaucracy and management of time, others have continued to distance themselves from civilization based on the compliant of the innovative machines becomes avenue for fraud. Worthy of note is that as usage increases, electronic card crime increases. Every week, hundreds of bank customers across the major cities are finding their deposits or substantial part of it stolen by faceless crooks Afam (2009).

    Afam (2009) also ascertained that ATM fraud has taken an alarming proportion and most customers are now afraid to use their cards, there is no doubt that there must be collusion between some bank staff and fraudsters to commit these fraud and for such fraud to be successful. This is one of the reasons why customers are afraid about the security of online transactions. While on the other hand, some customers have not helped matters because of their carelessness or fraudulent nature, all these have given rise to ATM challenges in the banking industry.

    This project work examines and assesses the ways by which these fraudsters carry out the fraud affecting our banking industry and customers patronage to banks.

    1.3 Statement of Problem

    There are difficulties experienced in the manual system or fraud detection in financial sectors. These factors therefore necessitate the implementation of a computer – base system in other to overcome the short comings of the manual system of detecting fraud.

    1. Inefficiency or poor management: If the management or institutions are poor in management, then it can never be fully achieved.
    2. Lack of adequate controls can open the door to theft and/or fraud: ATMs require a high degree of additional control beyond the existing one. Institutions need to make sure they are able to track funds that have been deposited into the ATMs but not yet accounted for in central accounts as fraud or errors may be involved with the deposit. Service providers can supply institutional support to fully integrate controls.
    3. Lack of understanding of client demand for and willingness to adopt ATMs can lead to failed implementation. When initiating new technologies such as offering financial services through ATMs, institutions must be prepared to educate clients on the benefits and train customers on the use of the new technology. Failing to do so can reduce adoption rates and/or lead to a rejection of the technology by the targeted clients.
    4. Failure to adequately consider the implications of ATMs on the business financial and operational performance. If financial service providers do not fully calculate the cost of the ATMs on the institution (purchase, installation, maintenance, staff and client training, new controls) it will be unable to understand the cost-benefit of using the new machines and could end up with a poor investment.

    1.4 Aim and Objectives of Study

    The aim of the study is to assess the Activities of Fraudsters using ATM Pin. In achieving this aim, the following specific objectives were laid out as follows:

    1. To know the relationship between ATM fraud and fraud
    2. To examine the ways by which these frauds are committed.
    3. To know the measures that central bank of Nigeria has taken to mitigate this fraud.
    4. To know the reactions of the customers affected by these fraud.
    5. To know the reactions of banks when these frauds are committed.
    6. To know whether fraud affects financial institution growth
    7. To find out the ways that we can avoid this risk ATM Pin
    8. To proffer solution to fraud in Nigeria ATM Pin

    1.5 Research Questions

    The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:

    • Is there any relationship between ATM fraud and fraud?
    • What are the ways by which these frauds are committed?
    • How will the central bank of Nigeria stop this crime ATM Pin?
    • How can the customers and users of ATM avoid the risk of being defrauded?
    • What are the solutions to fraud in Nigeria ATM Pin?
    • How does fraud affect financial institution growth ATM Pin?

    1.6 Research Hypothesis

    In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.

    • H01: There is a significant relationship between ATM fraud and fraud in Nigeria
    • H02: ATM fraud does not affect customers’ patronage and financial institution growth.
    • H03: There is no significant effect of ATM Fraudulent activities in the Nigeria banking industry

    1.7 Significance of Study

    This study will be of immense benefit to Banking Industry and other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.

    1.8 Scope of Study

    The study focuses on an Assessment on the Activities of Fraudsters using ATM Pin in Nigeria Banking Industry.

    1.9 Limitations of the Study

    During the course of this study, many things militated against its completion, some of which are:

    1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
    2. Research material: availability of research material is a major setback to the scope of the study.
    3. Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
    4. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

    1.10 Definition of Terms

    Fraud: Is defined as deception deliberately practiced with a view of gaining an unlawful or unfair advantage.

    Economic Crime: This is the manifestation of criminal act done either solely or in an organized manner with or without associates or group with the propose earning wealth or being rich through all illegal means.

    Identity Theft: This is an action that proceeds enable a fraud to occur.


    2.0 Literature Review

    2.1 Introduction

    This chapter focuses on the review of related literature. A literature review includes the current knowledge as well as theoretical and methodological contributions to a particular topic. It documents the state of the art with respect to the topic you are writing. It surveys the literature in the topic selected. In this research work the literature review includes the …

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