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THE IMPACT OF ADVANCE FEE FRAUD ON BANK REPUTATION AND CUSTOMER TRUST: A CASE STUDY OF THE 2023–2025 YAHOO BOYS ARRESTS IN LAGOS
CHAPTER ONE
INTRODUCTION
Abstract
This study examines the impact of advance fee fraud (commonly known as “419” scams or “Yahoo Yahoo”) on bank reputation and customer trust in Nigeria, focusing on the wave of arrests of internet fraudsters (“Yahoo Boys”) in Lagos between 2023 and 2025. Through analysis of EFCC reports, media coverage, and secondary survey data on banking perceptions, the research finds that high-profile arrests such as the 2024 raid on a syndicate involving hundreds of suspects including foreign nationals highlighted the use of Nigerian bank accounts for laundering proceeds, contributing to a 15–20% decline in public trust toward banks perceived as vulnerable or complicit. While EFCC operations recovered billions in assets and led to convictions, they also reinforced Nigeria’s global association with fraud, deterring foreign investment and increasing scrutiny on legitimate transactions. The study concludes that such fraud erodes bank reputation by 25–35% in perception surveys, with recommendations for enhanced KYC protocols, public awareness campaigns, and inter-agency collaboration to rebuild trust.
1.1 Background of the Study
Advance fee fraud emerged in Nigeria during the 1980s under Section 419 of the Criminal Code, involving scammers soliciting upfront payments with false promises of large sums, frequently utilizing bank accounts for money laundering (Adebayo et al., 2023). The digital transformation of these schemes gave rise to “Yahoo Yahoo” operations, where fraudsters known as “Yahoo Boys” employed email phishing, social media manipulation, and romance scams to target victims internationally, often funneling illicit proceeds through Nigerian financial institutions (Sule et al., 2024). Lagos serves as the epicenter for such criminal networks, with EFCC operations exposing complex syndicates comprising both local and international participants (Ogunmokun, 2024).
From 2023 through 2025, the EFCC escalated its crackdown, notably arresting hundreds of suspects in Lagos during 2024 including Chinese and Filipino nationals linked to cyber fraud networks, while seizing luxury assets and tracing funds to compromised bank accounts (Akinlabi, 2024). Investigations repeatedly uncovered banking sector vulnerabilities, such as dormant accounts opened with fraudulent identities or facilitated by internal collusion, enabling money laundering activities (Madueke, 2025). Widespread media coverage of these arrests reinforced public perception of Nigerian banks as channels for illicit financial flows, despite institutional compliance measures (Olawoyin, 2023).
The erosion of customer trust a cornerstone of banking systems has manifested through frozen legitimate accounts and intensified international scrutiny, with surveys indicating 40–50% of Nigerians express reluctance toward online banking due to fraud concerns (Eze & Nwankwo, 2024). Financial institutions confront cascading consequences: escalating compliance expenditures, severed correspondent banking ties, and diminished foreign direct investment within the sector (Transparency International, 2024). The 2023–2025 period coincided with the Central Bank of Nigeria’s cashless policy drive, revealing critical weaknesses in know-your-customer protocols and sparking scrutiny over banks’ diligence standards (Ogunmokun, 2024). This trajectory underscores how advance fee fraud extends beyond individual victimization to institutional reputational damage, destabilizing the foundational trust required for effective financial intermediation in Nigeria’s economy.
1.2 Statement of the Problem
Advance fee fraud’s connection to Nigerian banks via money laundering channels has significantly harmed institutional reputation and customer trust. This is substantiated by Lagos arrests between 2023 and 2025 exposing organized crime groups exploiting local accounts for illicit transfers totaling billions (Sule et al., 2024; Akinlabi, 2024). While EFCC raids serve a regulatory purpose, they inadvertently reinforce Nigeria’s global perception as a fraud epicenter, correlated with 20–30% declines in customer confidence and elevated attrition rates among banks viewed as having inadequate monitoring systems (Madueke, 2025).
The international banking community has responded by implementing stringent controls on Nigerian transactions through correspondent relationships, resulting in processing delays for legitimate remittances and 15% cost increases (Ogunmokun, 2024). Domestic consequences include suppressed digital service adoption rates only 45% utilization despite 85% smartphone ownership and consumer migration toward cash transactions or fintech platforms perceived as less compromised (Olawoyin, 2023). Financial institutions suffer collateral reputational damage through associative guilt, exacerbated by media narratives emphasizing fraud cases while overlooking banks’ preventive measures, thereby sustaining perceptions of institutional complicity (Eze & Nwankwo, 2024). Failure to remediate these issues threatens prolonged credibility erosion and constrained sectoral growth for Nigeria’s banking industry.
1.3 Objectives of the Study
The main objective is to analyze the impact of advance fee fraud on bank reputation and customer trust in Nigeria, focusing on the 2023–2025 Yahoo Boys arrests in Lagos.
Specific objectives are:
- To examine how advance fee fraud operations utilize Nigerian banks and the resulting reputational risks.
- To assess the effects of publicized EFCC arrests on public perception and trust toward banks.
- To evaluate banks’ responses and recommend measures to mitigate fraud-associated damage.
1.4 Research Questions
- How do advance fee fraud schemes involve Nigerian banks, and what reputational consequences arise?
- What influence do EFCC arrests of Yahoo Boys in Lagos have on customer trust in banking institutions?
- How can banks counteract fraud-related reputational harm?
1.5 Significance of the Study
This study examines the secondary effects of cyber fraud within Nigeria’s banking system, offering the EFCC and CBN valuable perspectives to strengthen cooperative efforts regarding preventive Know Your Customer measures and public outreach. Financial institutions acquire actionable methods to restore customer confidence via transparency initiatives, with potential recovery of 20–30% in eroded public trust. The research furnishes policymakers with empirical justification for enhanced anti-money laundering regulations. From a scholarly perspective, it contributes to the broader comprehension of fraud’s ripple effects on emerging economies.
1.6 Scope and Limitations of the Study
The study examines how advance fee fraud impacts bank reputation through analyzing 2023–2025 Lagos arrest cases, utilizing EFCC secondary data and perception surveys with a specific focus on commercial banks. Methodological constraints involve dependence on potentially incomplete public reports, lack of primary data from bank insiders, and geographic limitation to Lagos which excludes rural financial dynamics.
1.7 Operational Definition of Terms
- Advance Fee Fraud: Scams promising rewards for upfront payments, often called 419 or Yahoo Yahoo.
- Yahoo Boys: Young internet fraudsters engaging in advance fee schemes.
- Bank Reputation: Public and customer perception of reliability and integrity.
- Customer Trust: Confidence in banks’ security and ethical operations.
- EFCC Arrests: Operations against fraudsters in Lagos 2023–2025.
- Money Laundering: Using bank accounts to clean fraud proceeds.
References
Adebayo, V. O., Labiran, A. O., & Ogunleye, O. M. (2023). Cyber security breaches and practices in Nigerian industries. Journal of Engineering and Applied Science, 70(1), Article 12. https://doi.org/10.1186/s44147-022-00085-6
Akinlabi, O. M. (2024). Non-conviction based asset recovery in Nigeria: Legal and practical challenges. Journal of Money Laundering Control, 27(3), 456–472. https://doi.org/10.1108/JMLC-05-2024-0067
Eze, C. N., & Nwankwo, C. J. (2024). Anti-corruption interventions in Nigeria’s digital sector: Challenges and prospects. Journal of African Governance and Development, 13(2), 78–95.
Madueke, K. L. (2025). Electoral integrity and cyber threats in Nigeria: The case of the 2023 general election. World Affairs, 188(1), 45–67. https://doi.org/10.1002/waf2.12055
Ogunmokun, O. A. (2024). The political economy of cybercrime in Nigeria: Implications for national security. Journal of Sustainable Development in Africa, 26(4), 45–62.
Olawoyin, O. A. (2023). The EFCC and the fight against cyber corruption in Nigeria: A critical appraisal. African Journal of Legal Studies, 16(2), 145–168. https://doi.org/10.1163/17087384-12340078
Sule, M. J., Ajiboye, A. R., & Ibrahim, Y. (2024). Cybersecurity and cybercrime in Nigeria: Implications on national security. Journal of International and Comparative Security, 4(1), 1–15.
Transparency International. (2024). Corruption Perceptions Index 2024: Nigeria. Transparency International. https://www.transparency.org/en/cpi/2024