The three complainants are suing the telco and Vodafone Group for $2.38 billion in damages, alleging fraudulent misrepresentation, material nondisclosure of facts, illegal and unlawful investment of money from M-Pesa account holders, predatory lending practices, and charging exorbitant interest rates.
The Nairobi-based company has recently been under increased criticism for the accuracy of its mobile overdraft service Fuliza, which is powered by the well-known mobile money service M-Pesa, as well as for an increase in SIM swap fraud cases that target Fuliza limitations.
Safaricom is allegedly yet to pay interest to its more than 32 million M-Pesa account holders, whose money "it uses to lend and earn profits," despite the company making money through its 15-year collaboration with the nation's KCB and NCBA commercial banks to provide lending services.
It has also been alleged that the Central Bank of Kenya (CBK) was aware of Safaricom's "banking business," but did nothing to control the telco's operations in accordance with the Banking Act.
The impression that Safaricom is not doing enough to combat SIM swap fraud, which has resulted in customers losing millions through scams and fraud targeting its mobile money services, exacerbates the company's problems.
The threat is so pervasive that in 2019, Safaricom implemented a number of measures to stop it from spreading and issued a warning to its consumers about the globally ubiquitous problem, which is not limited to only the east African nation or the continent.
Safaricom has frequently fallen prey to similar issues. Scammers have preyed on its clients, emptying their bank accounts or committing crimes using the victim's personal information.
At least four Kenyans are suing Safaricom and the nation's Communication Authority in a court spat that began just last week. The plaintiffs claim they were the victims of an alleged SIM switch fraud.
In addition to the widower whose deceased husband borrowed money "straight from the grave" shortly after his burial, other parties who have lost millions of dollars are also parties to the class-action lawsuit. The prevalence of SIM switch fraud, also known as SIM splitting fraud, port-out scamming, or SIM jacking, is rising not only in Africa but all over the world.
