When mobile fraud became enemy of electronic transactions in Malawi

A story of deceit and trauma is told!

On a bizarre morning; a mobile money operator Steve Muliya plying his trade in Blantyre populous Ndirande Township receives a distressing phone call that overturned his world.

Muliya: One of the victims.

Throughout his entrepreneurial life Muliya had committed to building a thriving mobile money business empire.

But on this fateful day; thunder struck, on the other end of the line, his trusted agent called trembling with fear as she recounted a horrifying incident that had just occurred.

Robbers, she narrated, had ambushed her, snatching away both the cash and valuable mobile phone credited with substantial funds amounting to MK500 000.00.

As though not bad omen enough Muliya would not redeem both the stolen cash and the electronic funds … for; it needed a long process before service providers TNM and Airtel, could help.

“Both TNM and Airtel told me it won’t be as easy to recover the money saying I would need a Police report to facilitate any investigations whilst I changed my pin to try salvage the money left,” he said.

Sadly, this experience isn’t only exclusive to Muliya in Lilongwe … it seems a familiar experience to many mobile money dealers across the country.

Kunje: Had his simcard swapped without his consent.

Court documents before Blantyre Magistrate Court indicate.

And MIJ Online investigations can affirm that fraudsters are SIM swapping their cards and scamming unsuspecting operators a story echoed by Nicholas Kunje, another successful businessman whose SIM card was swapped without his knowledge or consent.

Upon being defrauded he recounts; “all efforts to recover my money proved futile until I finally gave up for the sake of my peace”.

Whilst SIM card swapping has increasingly been a prevalent tactic used by fraudsters to gain unauthorized access to personal accounts and exploit innocent operators; another pressing concern has remained inefficiencies in the bureaucratic systems.

No wonder; compounded, rigid as the bureaucratic web would be its not been as easy for victims to claim their funds once stolen from them leading to distrust and frustration among victims of mobile fraud.

Yet Malawi’s economy continues to face a significant loss of approximately 14.4 billion kwacha annually due to mobile fraud according to communications regulator – MACRA.

Such is the price the country’s economy has to pay over mobile money fraud with figures surpassing the few reported cases.

Suleman: We are making efforts.

It means, according to Daudi Suleman, director general of Malawi Communications Regulatory Authority the country is estimated to currently be losing approximately MK2.81 billion per month to mobile money fraud.

He says: “there’s also been an increase in cyber-crime as there have also been a lot of issues around mobile money fraud.

“Our findings indicate the economy is losing about 1.2 million United States dollars per month to mobile money fraud … figures that are so worrying and needing address,” says Daudi.

Given the footprints of fear printed on mobile money consumers; the fair competition watchdog Competition and Fair Trading Commission rates the financial sector among the most industries affected by unfair trading practices.

Apparently; the commission receives an average of 40 complaints each month from various including business and the financial sector.

Vincent Nkhoma, executive director for the commission says these complaints encompass a range of concerns from financial scams, fraud, failed bank transactions and inadequate explanations of terms and conditions for insurance policies provided to clients.

“We have realized that we receive quite a number of complaints regarding the financial sector, it could be that there is an information gap for which were created to provide that information or it could be that they are not doing something from their side which they should do,” says Nkhoma.

Complicating matters, the country’s legal framework lacks coherence, leading to a situation where fraud victims are being passed between different institutions.

Meanwhile the parliamentary committee on Media and Communication has declared its intent to collaborate with more financial stakeholders to address challenges connected to digital fraud.

This decision comes in response to the escalating number of fraud cases that continue to plague the nation, a trend attributed to the ease of access and rapid growth of digital finance platforms.

Dossi: We need more laws.

Susan Dossi, the committee’s chair, emphasized the urgency of addressing this matter promptly, given the alarming rate at which such cases are increasing.

“The issue of digital fraud is on the rise and as you are aware we are in the digital era and a lot of things are happening” says Dossi.

She adds: “there’re a lot of issues coming up starting with registration and the issue of awareness, so we have agreed is to have a stakeholders meeting because what we have noted is that every stakeholder is blaming the other”.

As for Jean Philipo Priminta, director general of the Financial Intelligence Authority, issues a strong warning, emphasizing the urgent necessity of implementing a robust policy to restrict the number of SIM cards and bank cards that can be owned by a single individual.

Priminta’s statement serves as reminder of the gravity of the situation and the imperative to safeguard financial systems and protect individuals from fraudulent practices.

Piriminta: We do not relent.

“The opportunity that criminals are using is the ability for anyone to register more than one SIM card, because especially cases that have come from our prisons, we find that one card will be used today to steal money from victims and then tomorrow it is no longer working the person has switched to another SIM card”.

Sibusisiwe Nyasulu, customer experience director at Airtel Malawi, acknowledges the company has been receiving complaints about SIM swaps. She’s been prompt though to mention that strict measures have been implemented by the company to control SIM swaps, ensuring that they are conducted only by customers themselves and not by unauthorized individuals.

“There has been a lot of concerns on the growth of fraud, but as Airtel we have been doing a lot of things to ensure that we are protecting our customers, today if you see on each of your phones you will see that you have received consistently messages that do not share your passwords to any one, your pin is protect do not share” says Nyasulu.

As it would turn out Police reports at Lilongwe record of two suspects arrested of orchestrating a scheme that’s been defrauding people of MK6 million through unauthorized accesses to their mobile money accounts.

One of the detainees, Mustafa Timothy Misolo, aged 26 and an ex-employee at the TNM-Crossroads service center has been part of this hallmark alongside his accomplice Phonex Afiki, aged 32, resides in area 23.

MIJ Online can also affirm the suspects are believed to be connected to a larger network involved in the illicit supply of mobile SIM cards to inmates at the Zomba Maximum Security facility.

Commenting on the matter, Peter Kambalame, the Manager of Policy and Oversight at the Reserve Bank of Malawi, says the central bank is actively developing policies and strategies to enhance the safety and security of their customers.

This underscores the importance of proactive measures to combat money fraud and reassure the public of the Reserve Bank’s commitment to their financial well-being.

“The number one thing is to prevent the fraud through making the public aware of fraud, making public know of the schemes around this fraud and also the Reserve Bank is also coming up with laws and regulations to ensure that customers are protected” observes Kambalame.

Acknowledging the advancements Moses Kumkuyu, information and digitalization minister, expresses concerns regarding the issue of cyber security.

Kunkuyu: We are aware of the matters.

He acknowledges that people are becoming apprehensive about utilizing digital platforms due to the associated threats.

“People get scared to adopt the use of ICT’s in other areas because of the threats that come with it, and the coming in of ITU to facilitate the cyber drill, to look into issues of cyber security, how our people can be protected when they are online even those that are using mobile money platforms they should be protected” said Kumkuyu.

Malawi, like many developing nations, relies on mobile technology for financial inclusion and economic growth.

Mobile money services have become crucial for small businesses, remittances, and access to essential services.

However, rampant fraud deters individuals from embracing these digital platforms, stunting financial inclusion and impeding the country’s socio-economic development.

Ultimately, combating mobile fraud requires a multi-faceted approach that combines legal reforms, public awareness, and technological advancements.

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