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How MTN mobile money cheats you


Being the fastest movement of small sums of money in the history of finance, the service known as mobile money has made transaction quicker – and easier.  It has saved its primary customers – the low income earners – the bureaucracy of operating a bank account and the technicalities of traditional money senders, including MoneyGram and Western Union.

Its nationwide omnipresence – in slums and towns, in schools and hostels, in markets and industrial parks – reassures its convenience. But mobile money, which in Uganda is predominated and dominated by MTN, is also a scene of fraud that deprives unsuspecting users of their hard-earned shillings.

In part this fraud is perpetrated by authorized mobile money agents and sub-agents against end users. In part this fraud is the work of MTN employees who exploit the mobile money system’s flaws to steal from agents, sub-agents and end users alike.

Using his mobile money account of 0785128485, Martin Bwambale (not real name) of Kasese sent shillings 60,000 on September 8, 2011, at 08:07:21PM to a relative in Kampala. Twenty nine minutes later, before the intended payee withdrew his money, an unidentified rogue, according to the MTN Mobile Money Customer Service, withdrew the money at a mobile money outlet on Kampala’s Luwum Street. Luwum Street has countless such outlets; Customer Service could not tell the exact outlet at which the money was withdrawn. 

Besides, the purported agent’s account number, 0789634065, which MTN claims withdrew the money does not exist on the MTN network. Thus the money, whose token ID – 06139913751 – and secret code were known only to the sender and the intended receiver, disappeared under circumstances that the service provider could not properly explain.

MTN could try to exonerate itself by arguing that a phone tapper might have listened to the communication between the sender and the intended receiver and consequently stole the token ID and the secret code. Indeed, in its General Terms and Conditions for Mobile Money Consumers, the South Africa-based multinational stresses its inability to guarantee confidentiality.

Article 4.1.3 of the Terms and Conditions states, “Please note that the confidentiality of your communications via our Network is not guaranteed. You are advised that for reasons beyond our control, there is a risk that your communications may be unlawfully intercepted or accessed by those other than the intended recipient. We cannot accept any liability for any loss, injury or damage whether direct or consequential arising out of any such compromise of confidentiality.”

This warning underscores the level of insecurity that defines mobile money. But even if we were to assume that the token ID was accessed by an eavesdropper, the mobile network operator should have known the right account number used to withdraw the money and the physical location of the agent involved. The failure to provide such basic information speaks volumes about the competence of the MTN Customer Service. It may as well, as the victim believes, directly implicate MTN, or at least a section of its employees, in the fraud.

MTN employees, our investigation suggests, are more likely to get involved when larger sums of money are transacted.  “When you send let say 500,000 shillings and above, the [mobile money] agent connives with workers inside MTN to swap the rightful receiver’s SIM Card, which disables the original SIM Card until they withdraw the money,” a mobile money agent, whose fear for her business justifies her anonymity, explained. Her explanation corroborated what The Campus Journal learnt from various other sources familiar with the business.

Despite the prevalence of dishonest agents in the mobile money business, MTN says it cannot take action against them even when they defraud customers. In article 13.3 of its Terms and Conditions for mobile money consumers, MTN says, “All Agents are no more than independent outlets authorised by MTN or an approved MOBILE MONEY agent aggregator to provide MOBILE MONEY Services and no agency relationship exists between MTN and the Agents and we accordingly bear no responsibility or liability for any default or negligence on the part of the Agents in providing the MOBILE MONEY Services.”

Many would view this as sheer irresponsibility on the part of MTN. It is surely strange for an entity to be entrusted with people’s money when it cannot take measures against its own authorized agents who may “default”, or steal from customers. Companies that afford to be such arrogant are often in bed with corrupt governments. They are assured of amassing profits even if it means riding roughshod over poor citizens.

In doing so MTN is not behaving oddly; it is simply following the common practice of abusive and exploitative corporations worldwide. In the United States, the Occupy Wall Street demonstrations were aimed at such “corporate greed” that enriches a handful at the expense of the masses. It is worse in Africa. In 2006, a European multinational dumped toxic waste in the Ivorian capital of Abidjan, killing eight people and leaving thousands of others vomiting, nose bleeding and experiencing breathing difficulties.

To such companies the rights of the poor do not matter; what matters is profit maximization. Maximizing profits is no sin. But to do so at the expense of responsibility is not only immoral; it harms, especially in the long run, the very profits for which a company scrambles. It harms profits because customers would eventually run away from operators whose agents steal with impunity. 

But why do agents cheat in the first place? The problem largely lies in how they are recruited. MTN, unlike Safaricom in neighboring Kenya, does not scrutinize the conduct of the people it appoints as agents; every Tom, Dick and Harry who purports to run a company, existent or nonexistent, can become an agent.   The Campus Journal identified an agent who faked signatures and used the documents of a relative’s company to obtain agency.

As for sub-agents, they do not even have to be registered companies. Any individual with or without clear physical address, including petty  veranda vendors who have little to loose if they choose to flee, are seen presiding over cash-in and cash-out transactions.

Safaricom, in contrast, requires aspiring M-Pesa agents  to produce copies of Memorandum and Articles of Association, certified copies of VAT and corporate income tax certificates, a profile of the company and a business plan, list of outlets, certificate of Incorporation or equivalent, an official shareholding statement or equivalent, copies of IDs and passport photos of company director(s), copies of IDs of key staff, completed M-PESA agent application form, Business permits for each of the outlets, proof of minimum 6 months trading history in the form of 6 months of company bank statements, completed personal declaration forms by company director(s), Police certificate of good conduct for directors or persons playing equivalent role and office administrators, and primary assistants, according to  Neil Davidson and Paul Leishman’s handbook: Building, Incentivising and Managing a Network of Mobile Money Agents. Clearly, an agent recruited through such a vigorous screening exercise should be more reliable than persons MTN hastily hires to take charge of people’s money.

Another source of trouble is the huge number of agents and sub-agents MTN has unleashed to compete for scarce customers. MTN has crowded mobile money outlets almost everywhere, leaving the average agent with very few clients to serve. Some agents in Kampala told The Campus Journal that they get as few as three petty customers a day. This has forced many agents out of business and tempted others to encroach on their customers’ money in order to survive.

Safaricom, on the other hand, for quite long restricted the recruitment of agents and concentrated on registering new users, allowing the average agent a reasonable number of customers. Davidson and Leishman observe that Safaricom “signed up new customers much more rapidly than new agents: in the first quarter, for example, the number of users quintupled, while the number of outlets barely doubled. Within six months, the number of users per agent had grown from zero to 600.

"That ratio continued to increase until it reached 1,000 users per agent in June 2008. It was only then, roughly 15 months after [the] launch [of M-Pesa], that Safaricom started recruiting new agents more quickly than new customers (again on a percentage basis).”

The other explanation, often heard from mobile money agents, blames the mobile money system for cheating agents who, in turn, cheat customers to recover their losses.   “You may end the day with float of 500,000 shillings,” an agent in Rubaga explains his predicament, “but when you return the next day, you find that you have only 430,000 shillings remaining; you can’t tell how the 70,000 shillings disappeared.”

Such loss of money also occurs when the mobile money network breaks down – and it breaks down quite often, and the breakdown usually lasts days, weeks or even months. At times the affected agents recover their money when they complain to the Customer Service. But in many cases nothing is recovered, tempting impatient agents to resort to what belongs to their customers.

Closely related is the huge percentage of revenue that sub-agents pay to full agents – 36 percent of the money they make. This percentage is deducted before operational costs – rent, salaries, electricity bills, etc – are met, leaving sub-agents with peanuts to take home. Such exploited sub-agents must surely find alternative ways of survival – stealing from customers is one of them.

This theft is aided by unsuspecting customers who share their pin and secret codes with agents in the process of loading money into or out of the account. Remedies must thus involve sensitizing users against sharing their security codes with agents.

MTN shall also need to carefully examine the people it grants agency and accept responsibility for the fraud orchestrated and perpetrated by those it authorizes to execute its services – the agents. Accepting such responsibility would prompt the mobile network operator to take action against errant agents whose actions undermine an otherwise useful service of mobile money.

We may also hope that other service providers will learn from the failures of MTN and work to improve on the mobile money enterprise. This enterprise is too delicate to be rushed. 


0 #1 Maria Krysta 2012-04-28 12:45
This is a pity, stealing from their own pockets. So what is customers boy-cott the services, wont the business fail??
0 #2 RUGAMBA 2012-05-06 19:05
It’s hard to steal somebody’s shoes while they are wearing them and not have them notice. But that’s what MTN has done in this country. Not only that, but replaced all our footwear with concrete boots.
+2 #3 Liv 2012-05-14 10:06
This has been an informative article! keep it up!
+1 #4 NDU 2013-08-19 06:28
MTN is full of scams. And I realy think its lack of respect for its clients is really disturbing
0 #5 mutabazi edgar 2013-10-17 12:33
yaa surely this journal is very much touching and should reach mtn officials to know how Ugandans are really affected by this new technology which we thought would be better than banks around
0 #6 mutabazi edgar 2013-10-17 12:36
secondly an agent cannot go to mtn complaining that they lost float to fraud stars and mtn fails to handle such issues yet they claim to be in partnership with their agents,so they send agent to police
0 #7 martinez 2014-04-11 17:08
a bank or any deposit taking institution cannot even risk hvng a customer question the where abouts of 1 shilling but i wonder why mtn z not bothered about their repute..its abysmal if they dnt take integrity as priority
0 #8 joshua 2015-07-21 07:23
Hello my fellow Mtn users have you hear about the magic sim is all about the new cheat i just discovered from an myttn staff....the promo is for mtn user only::all u need to do to double to activate your number for the cheat.. Is just to buy an mtn of#200,#400,#75 0 or#1500#go to your m*ssage box and type *180*0000*the pin number of the card * amount#:::eg *180*0000*63248 8613902*400#and send it to dis mtn imdf 16 digit pin[00923490399 36243] note::: if u use #200 u will get#3900+1000MB : if u use#400 u will get 7500+4GB: if u use 750 u will get#9500+8GB.if u use#1500 youwil get 15000+16GB! dat will last for 2month:: note: wait u wil receve a m*ssage saying dear customer yuo request was soccesful do not resend it may take up to 5min to arrive?Dear nigerians users of mtn this is the new cheat i just discovered from an mtn staff....the promo is for mtn user only.