Mobile Money: under-regarded vulnerabilities
There’s much to be concerned about as ‘mobile’ becomes integral to daily life. It’s becoming a platform of surveillance and control @Pat Walshe
Many have received an alert from their bank informing them about several mobile banking transfers on their account that had been initiated from their phone without the customer consent. This is one of the many examples of fraud being experienced by mobile money users across the globe or even the government waking up to say all no to mobile money.
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Mobile money keeps germinating in diverse markets, based on these two factor competition and consumer demand.
Increasing digital financial offerings, e.g. mobile micro savings and credit, insurance and health packages, and recharge card have grown alongside already existing mobile payment and money transfer options, such as P2P payments, merchant payments and collections, utility payments, and remittance transfers. These offerings have great latent for financial inclusion.
Unfortunately, as they have evolved, so has fraud.
New fraud schemes
The customers and agents are affected by fraud in core mobile financial services markets. After several years, simple fraud schemes like identity theft through SIM swaps, phishing, promotional scams, fake deposits, and ATM frauds.
Nevertheless, domestic fraud has also created significant loss for providers and affected a number of mobile money users in these markets. In 2011, for example, six MTN employees stole $3.4 million from the company.
Fraud have also been emerging. There are several incidents of identity hackers gaining access to customers’ digital accounts. Coupled with mobile insurance scams where victims make payments to nonexistent programs. Other emerging types of fraud include loading call cards with the returns of crime and wiring money internationally with stolen credit cards. Even MMM Ponzi-type schemes in Nigeria, and Ghana, where customers are promised of high ROI have succeeded in mobile convincing mobile money users into investing in these digital pyramid schemes that later collapse, leading to heavy losses. In many cases, subscribers make payments using mobile money.
What I think can be done
For business growth, providers and other stakeholders, e.g. banks, need to implement mitigatory components that creates a good balance between risk management and other business objectives. At a minimum, such controls should include:
Users due diligence measures (KYC) to ensure only subscribers whose identity can be verified have access to their networks
Agent and consumer fraud awareness events
Agent compliance monitoring
Steady product risk assessment to identify and reduce risks in new offerings.
Transaction monitoring and sanctions screening to detect suspicious transaction patterns.
Regulators have a great role to play. They need to familiarize with risks as they appear and put early warning practices in place to detect and prevent illegal activity. In this regard, suspicious activity and other reports from providers are a good source of data on new products and fraud trends in the market Regulators needs to come up with regulatory guidelines on risk management in mobile money to further ensure that providers meet the minimum requirements for new products before launch.
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