Mobile Money fraud – a threat to achieving financial inclusion


For many years, attaining financial inclusion for all – especially persons within the informal sector of the Ghanaian economy – was increasingly challenging. The persistent financial instability, leading to intermittent insolvency of some banks, micro-credit institutions and Savings and Loan Companies made it unattractive for people to embrace banking services.

The introduction of Mobile Telecommunications and subsequently the adoption of mobile money services in July 2009 changed the banking industry’s dynamics – bringing financial services closer to the public through existing mobile wallets serving as pseudo-bank accounts for people.

Mobile money is an electronic payment type based on account wallets held by a mobile telecommunication operator and accessible from subscribers’ mobile phones. It offers simple person-to-person transactions rather than complex banking transactions. It provides an easy, fast, secure and cost-effective way of making payments.

A report by market research firm (Imarc Group) on Ghana’s Mobile Money Market estimates that the Ghana mobile money market size reached US$121.8billion in 2022, with an expectation to reach US$590.7billion by 2028. It is estimated that about 56.7 million mobile money wallets have been created in Ghana as at the end of 2022, with 20.5 million of them being very active. The simplicity of transactions, low cost and widespread accessibility have made the use of mobile money very friendly even to uneducated folks in the countryside.

However, the enormous gains derived from mobile money are threatened by the activities of mobile money fraudsters. For instance, the Bank of Ghana reported that a total of 12,166 cases of mobile money fraud was recorded in 2022. This article seeks to throw more light on the nefarious activities of mobile money fraudsters and measures to combat them.

Types of Mobile Money fraud

Fraud is commonly understood as dishonesty or deliberately practiced deception to secure unfair or unlawful gain. Joseck Luminzu Mudiri, writing for MicroSave Journal on the topic ‘Fraud in Mobile Financial Services’, defined mobile money fraud as “Intentional and deliberate action undertaken by players in the mobile financial services ecosystem aimed at deriving gain (in cash or e-money), and/or denying other players revenue and/or damaging the reputation of other stakeholders”. Thus, essentially, mobile money fraud is largely perpetuated by players within the mobile money value chain.

Mobile money fraud comes in different forms. However, one can easily group them under the following, based on a study of the Bank of Ghana Annual Fraud Report:

Fake promotions – Mobile money fraudsters sometimes create enticing promotions such as fake lotteries, giveaways or discounted offers, designed to attract potential victims. These promotions are often sent via SMS messages, Whatsapp chats or via phone calls. In many instances, the fraudsters pretend to be a worker of the mobile operator who has called to help his intended victim redeem the supposed prize.

The fraudster then begins to ask the victim a series of questions as means of authenticating the supposed winner’s identity, and then instructs them to follow some basic steps by dialling short codes via an unstructured supplementary service data (USSD) string. As the victim obliges and follows the fraudster’s process, a debit message is pushed to the victim’s mobile phone for them to enter their mobile PIN-code and redeem the prize – only to be scammed of funds in their mobile money wallet.

Wrong transfers – This involves the use of fake SMS and reversal of funds requests. Thus, the fraudster adopts the posture of seeking to reverse a supposed erroneous transaction. With this type of mobile money fraud, a fake SMS is sent by the fraudster to his victim that indicates a deposit into a victim’s mobile money wallet. The fraudster then calls the victim pretending to be from the mobile money operator’s office. The Fraudster informs the victim of a wrong deposit and offers to assist reverse the transaction. Most people fall victim to this scam because they don’t check their mobile money balances and allow the fraudster to withdraw money from their wallets.

SIM card swaps – Sim card swaps are perhaps the most sophisticated form of mobile money fraud, which can lead to the complete takeover of a person’s mobile wallet – or sometimes bank account if the victim has linked their mobile wallet to a traditional bank account. SIM card swapping is a fraudulent way of gaining unauthorised access to someone’s mobile phone number by manipulating the mobile operator.

Thus, on many occasions, investigations have proven that SIM card swaps are successful with the help of an insider (someone working with the mobile operator). This is because the infrastructure to swap the SIM of a mobile subscriber is owned and controlled largely by the mobile telecommunication company. When a fraudster successfully swaps the SIM of his victim, he can receive all their intended communications. The fraudster can receive information such as transaction notification alerts, account balances via SMS etc. of his victim, and can leverage that to withdraw funds from the wallet.

Fake product delivery – In recent times, Ghana has seen an increasing number of online shops on social media and private delivery companies that offer door-to-door delivery services in partnership with these online shops.  Some fraudsters pose as delivery companies and contact their victims under the guise of delivering goods to them from shops, or sometimes their relatives abroad. The fraudsters convince their victims that the package-sender did not pay for the delivery’s full cost and require payment before they can transport the product. As soon as the victim makes a payment to the mobile wallet, the fraudster switches off his phone and runs away with the funds.

Fake servicing agents – Another emerging mobile money fraud type is the situation wherein people clone the websites of some popular retail outlets that sell electronic products such as televisions, mobile phones, air-conditioners etc. and create similar websites as if they are service agents of the original electronic retail outlet. Unsuspecting victims who may require repair work on their electronic products unknowingly call telephone numbers displayed on the cloned website.

The fraudsters are often abreast with knowledge of the products sold by the original retail outlet, and deceive their victims into making mobile money transfers to a mobile money wallet for the services requested. Such transfers are often described by the fraudsters as commitment fees, and they insist on receiving some payment prior to their moving to the location of their victim to provide the required service.

Challenges in combatting Mobile Money fraud

There is no doubt that mobile money fraud constitutes the number-one fraud cases in Ghana. Combatting the menace seem challenging due to various issues some of which are discussed below:

Weakness in regulatory enforcement – The Bank of Ghana has primary responsibility for regulating the banking industry. The National Communication Authority on the other hand is responsible for regulating the Mobile Telecommunications Industry. Thus, ensuring an effective regulation of the mobile money industry must be by close collaboration between these two state institutions. Admittedly, the Bank of Ghana has issued some guidelines and directives that seek to regulate the activities of Dedicated Electronic Money Issuers and Payment Service Providers who are the key players within the mobile money industry.

However, enforcing these regulations is always a challenge – because the Bank of Ghana largely depends on Banks and Specialised Deposit Taking Institutions to achieve their goal. On the other hand, the National Communication Authority that has direct oversight responsibility over the Mobile Telecommunication companies may be lacking the personnel with experience in financial market management to effectively monitor and check the mobile operators.

Seeming lack of cooperation from mobile operators – Victims of mobile money fraud have often complained about the seeming lack of cooperation from mobile money operators. This includes individual subscribers, organisations, banks and sometimes law enforcement officers.

The legal bureaucracy that is often characterised by demands from Telecommunication companies before they reveal the identities of alleged fraudsters makes it difficult to combat mobile money fraud. It is believed that the first three to four hours of any mobile money fraud is usually crucial in tracing the fraudsters, because the funds are quickly transferred to different mobile operators due to availability of the mobile money interoperability platform prior to cashing out. Thus, even if the fraudsters are arrested, the funds might have been spent already.

Further to the above, some mobile operators have been uncooperative toward ensuring the registration of all mobile subscribers and the need to deactivate accounts of unregistered subscribers. It will take a trusted subscriber database cleansed of fake identification cards to help combat mobile money fraud. Hence, any attempt at further delaying the valid registration of all mobile subscribers will only accrue to the benefit of fraudsters.

High illiteracy rate – Combatting mobile money fraud has sometimes been challenging due to the literacy level of victims. As earlier indicated in this article, mobile money has indirectly become the key factor toward promoting financial inclusion – particularly within societies in the countryside. The level of some of these folks’ education is low, and they easily become targets of fraudsters.

Greediness on the part of victims

As a Fraud Examiner, I have often observed over the years that human greed has made people become victims of mobile money fraud and fraud generally. People may not be gullible, but driven by their insatiable drive to make quick money, they are exposed to believing everything that has the potential of enriching them. Thus, people often fall for traps such as ‘fake delivery of goods’ and ‘fake promotions’ due to their personal dishonesty and greed.

Some measures to prevent mobile money fraud

There are different measures that may be adopted to help combat mobile money fraud. These measures can be taken by the mobile operators and regulators, and individual subscribers who are often the victims.

Measures by mobile operators – Mobile Operators have enormous responsibilities toward the fight against mobile money fraud. This includes the following:

Enhancing KYC for staff and subscribers – It is incumbent on Mobile Operators to employ persons of high ethical standards, and ensure a continuous monitoring of these employees to ensure they are not colluding with fraudsters to steal from unsuspecting victims. Mobile money operators can adopt the culture of asset declaration to the various Human Resource Departments, so that wealth creation and acquisition of their staff can be monitored.

Improvement in technological systems – Mobile Operators must improve upon their technological systems to ensure greater transaction monitoring. Anti-Fraud Electronic monitoring tools should be deployed to help check patterns of transactions and fully investigate leads to suspicious activities.

Collaborating with key stakeholders – Mobile Operators should instil confidence into their subscribers by collaborating openly and honestly with relevant stakeholders – such as law enforcement agencies, banks, payment system providers etc. – to help combat fraud.  Over-relying on subscriber privacy rules to shield the identity of alleged fraudsters is greatly impeding the fight against mobile fraud.

Measures by subscribers – Mobile Subscribers can also take some measures to help safeguard their funds and combat mobile money fraud, such as the following:

Protection of mobile electronic devices – Mobile subscribers must endeavour to protect their mobile electronic devices such as cell phones and tablets from persons who may have unauthorised access. Some subscribers save their passwords and mobile money personal identity numbers (PIN) on their electronic devices. Access to those devices by fraudsters can lead to compromising the subscriber’s wallet balance. It is also important to regularly update your mobile electronic devices with the last security patches, operating system and firmware updates.

Protection of personal identifiable information – It is hugely advisable not to share your personal identifiable information (PII) with persons you cannot trust. Additionally, you should not share your mobile money PIN with anyone under any circumstances.

It is also advisable to make your PIN codes harder for people to guess. Avoid using predictable numbers such as your date of birth that can easily be guessed.

Verification of callers and texters – Mobile money subscribers must also make it a duty to verify the identity of callers or texters. Subscribers must ask relevant questions and be sure they are aware of the persons they are talking to, and should avoid giving out too much personal information. Subscribers must be extremely careful with SMS messages, since they can easily contain a phishing link.

Monitoring wallet activities – Subscribers must also endeavour to regularly review their account details. Be sure to remember the last transaction on your wallet and develop a conscious attitude to always check your mobile money wallet anytime there is a perceived transaction on the wallet, whether seen or told.

Awareness – Knowledge, it is said, is power. We must strive to educate ourselves by reading and asking relevant questions that will inform us about new fraud trends and how best to avoid becoming a victim. Finally, be sure to quickly contact your mobile operator if you suspect any fraudulent activity on your wallet. Every second may count in helping to stop a fraud on your wallet.

As shown by Bank of Ghana reports, Mobile Money Fraud is very prevalent in Ghana and every effort must be made to arrest it lest it derails the years of efforts made toward promoting financial inclusion, particularly within the informal sector. Mobile money fraud not only results in financial loss to subscribers or a mobile money provider, but also damages the service’s reputation with the customer and leads to mistrust in the financial eco-system.

>>>the writer is a Certified Fraud Examiner and Certified Information Systems Auditor with vast working experience in the banking sector in Ghana. He also worked as a Risk management professional in the big-four audit firm KPMG in the United States of America. He is the President/Founder of the Anti-Fraud Initiative Ghana (AFIG) and can be reached on [email protected], +13364056554

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