Court: Safaricom Accused of Neglecting Fraud Prevention, Leaving Millions of M-Pesa Users Exposed

Safaricom PLC and its subsidiary, M-Pesa Holding Company Ltd, are facing a new legal challenge after a Kenyan woman sued the two firms for allegedly failing to protect customers from rising mobile money fraud and leaving victims without proper support.

In a petition filed at the High Court, journalist Paula Rogo accuses Safaricom of negligence, weak data protection systems and failing to invest in effective fraud-prevention measures despite M-Pesa being central to Kenya’s economy.

She is suing on her own behalf and on behalf of other M-Pesa users who have suffered similar losses.

Rogo wants the court to declare that Safaricom violated her constitutional right to access information under Article 35 and the consumer and administrative rights of fraud victims under Articles 46 and 47.

She argues that the company has consistently failed to safeguard customer data, respond to fraud cases in a timely manner or compensate victims, even though it markets M-Pesa as a secure service.

Her case is based on an incident that occurred on January 3, 2024.

Rogo received a call from an unknown number and when she called back she spoke to a man who introduced himself as Michael Kiptoo, claiming to be a Safaricom employee.

To earn her trust, he allegedly sent her messages that appeared to come from Safaricom’s official SMS system and disclosed her M-Pesa balance, recent transactions and most contacted numbers. She believed this information could only be accessed by Safaricom staff.

Convinced that she was speaking to a genuine employee, she followed his instructions as he claimed he was securing her account.

He guided her through several steps using the Pochi la Biashara feature and Sh119,658 was withdrawn from her M-Pesa wallet.

He then took an additional Sh6,000 M-Shwari loan which brought her total loss to Sh125,658.

Throughout the call the fraudster repeatedly advised her not to share her PIN, something that reassured her he was legitimate.

She only realised something was wrong when he became aggressive and she ended the call.

After discovering the theft she attempted to reverse the transactions through Safaricom’s 456 reversal line but the system only supports person to person transfers.

She then tried using Safaricom’s WhatsApp support but got no response. She called customer care nine times before finally getting through about 40 minutes after the money disappeared. By that time the funds had already been withdrawn.

Rogo says the Safaricom representative she spoke to could not tell her whether she would be compensated, how the company intended to pursue the perpetrators or what steps it would take to prevent similar incidents.

Nearly a year later she says Safaricom has not taken any action despite her police report and repeated follow-ups.

She argues that this goes against Safaricom’s brand promises and ignores the increasing sophistication of mobile money fraud schemes.

Court documents state that Safaricom is fully aware that many M-Pesa users, especially the unbanked, semi-literate and digitally inexperienced, remain extremely vulnerable.

Even well educated customers, the petition notes, are increasingly falling victim to fraudsters who exploit system loopholes or receive help from insiders.

Rogo accuses Safaricom of failing to invest enough resources in fraud prevention which she says leaves millions of customers exposed despite M-Pesa’s crucial role in the country’s economy.

She is asking the High Court to order Safaricom to publish annual reports on fraud cases, losses and investigations, set up responsive and dedicated fraud reporting systems and establish a clear compensation framework for victims.

She wants these reforms implemented within 180 days.

She is also seeking a refund of her stolen Sh125,658 together with general damages for violation of her rights.

The case adds to public concern over mobile money scams and could set an important precedent on corporate responsibility in Kenya’s digital financial sector.