MTN Ghana Reimburses Victims of Pyramid Scheme

MTN Ghana Reimburses Victims of Pyramid Scheme

Mobile operator MTN Ghana announced that it has finalized a plan to distribute funds to victims of a pyramid scheme run by Savannah Brokerage Investment. The decision was made after the management of the operator’s mobile money service met with representatives of the victims, the Ghana Police and the government’s regulator. The police initiated the process of securing a court order to unfreeze the mobile wallets in order to facilitate the disbursement.

MTN uncovered the fraud a few months ago and reported the case to the regulator and the police. The operator was authorized to freeze the mobile money wallets while an investigation was conducted. The total amount to be disbursed is GHS 12.288 million (US $2.54 million), comprising GHS 12.096 million frozen in the mobile money accounts and GHS 192,297 in interest generated over the time period in question. The operator said that only those who invested and have not received any payments qualify for refunds. The refund will be disbursed based on each person’s contribution as against the total investment.

Tarifica’s Take

Mobile money has seen huge expansion due to its successes in providing financial services to unbanked and otherwise under-served clientele. This is especially true in mobile-first economies such as sub-Saharan Africa. Mobile operators have eagerly embraced the trend, partnering with banks to provide an ever-increasing variety of services to end-users, and in the process generating a good deal of income for themselves.

However, there are risks involved, and the present case gives an idea of what that can mean. MTN Ghana’s mobile money service was used by unscrupulous parties to promote and facilitate fraud, and that left the operator financially vulnerable. Now it has had to reimburse many subscribers for their losses. It is not as easy to repair a reputation as it is to refill a mobile wallet, and MTN is going to face a lower level of confidence from consumers with regard to the reliability and security of the transactions that go over its mobile money system. This is, therefore, a cautionary tale for operators, who should make as certain as possible that they vet the entities that it signs up to use these kinds of services.

On the other hand, MTN did the right thing by initiating the investigation and by releasing the reimbursement funds of its own free will, not at the insistence of authorities. This open and cooperative approach should do a good deal to reassure customers that MTN Ghana is on their side and to mitigate any damage to the operator’s image that may have occurred.