Scammers steal $117,000 using mobile money transfers every month in Malawi

In November 2022, the police station at Malawi’s capital city Lilongwe registered at least two complaints involving fraudsters who had transferred more than 3 million Malawi kwacha (around $2,920 at the time of writing) from the bank accounts of two victims, after registering new SIM cards against their phone numbers. Investigations into the complaints took detectives to Zomba city, where the police arrested four suspects, including a Telekom Networks Malawi (TNM) employee and a mobile money merchant for TNM Mpamba and Airtel.

“Upon being interviewed, they all admitted to [being] the ones responsible for the theft of [the] above reported cases and many more through SIM swap fraud,” the police report accessed by Rest of World said. “Currently, investigations are still in progress to recover the stolen money and arrest other suspects in the same system.”

Such crimes have become common in Malawi, as fraudsters exploit the weak digital security systems in the southeastern African country. Fraudsters steal 120 million kwacha (nearly $117,000) through mobile money transfers every month, according to the Malawi Communications Regulatory Authority (MACRA).

At 10.1 million, Malawi has more mobile money wallet owners than it does bank accounts, which the country counts at 1.2 million, according to the latest official data. These wallets make it easier for fraudsters to target unsuspecting users through identity theft, fake text messages, and impersonation. The rise of digital money fraud parallels the Malawian government’s increased efforts to promote financial inclusion by digitizing the economy.

“This is still a big problem,” Peter Kalaya, a spokesperson for the Malawi Police Service (MPS), told Rest of World. Kalaya did not disclose how many such cases occur every year. “Every month, our police stations record different cases of this nature. Scammers take advantage of low literacy levels among subscribers, and they continue stealing huge sums of money; and each time, they are becoming innovative.”

While many frauds occur remotely, some fraudsters target victims in person. Tapiwa Mussa joined Malawi’s fast-growing mobile money business as a merchant in 2021, where she helped customers send and receive money through platforms run by telecommunications service providers like Airtel and TNM. Four months ago, a customer came by her shop to withdraw about 270,000 kwacha (around $265), most of the cash she had that day. Mussa told Rest of World that after the transaction, the customer showed her a confirmation message and left with the money. “Although I did not receive the message on my phone, I gave him the money with the belief that the message to my phone hanged [sic] because of network problems,” she said. “Later, I realized that no amount was credited to my account, and that’s how I lost my capital.”

Cases like Mussa’s could potentially hamper the use of digital platforms and threaten Malawi’s digital economy as people become more skeptical, Daud Suleman, MACRA’s director general, told Rest of World. “The more people stay away from digital payments systems, the harder it will be for us to reach a digital economy phase where payment of a lot of goods and services ought to go through.”

John Kapito, executive director of the Consumers Association of Malawi (CAMA), attributes the rise of these fraud cases to gaps in the existing legislation. “The key challenge that we have in Malawi in terms of online money transactions is that we have weaker laws,” Kapito told Rest of World. “The enforcement of the rules that can guide proper usage of online money is weak. Currently, the onus is on the customer, and it becomes a challenge for ordinary consumers to go through the process of following up and holding someone accountable.”

The rise in fraud has pushed MACRA to implement new measures, such as introducing mandatory cellphone registration and establishing a digital forensic laboratory with the MPS.

“We are at an advanced stage in procurement processes for the Central Equipment Identification Register used for registering cellphones, and we should have the equipment operational very soon,” MACRA’s Suleman said during a press conference. “The digital forensic laboratory is also taking shape.” He added that the regulator is also considering another round of mandatory SIM card registrations to “flush out illegal and duplicated registrations that used a single national ID to register multiple SIM cards.” He said this would limit opportunities for fraudsters and help mobile money users feel safer.

Spokespersons from the MPS and mobile network operators told Rest of World that they are stepping up efforts to counter mobile money fraud.

“As a law enforcement agency, we are committed and geared to decisively deal with these crimes,” Kalaya of MPS said. “We are sensitizing the public through different forums for them to be aware of what constitutes these cases and how to report such cases to us. We are investigating, making arrests, and prosecuting offenders.” 

Norah Chavula Chirwa, head of Brand Communications for Airtel Malawi, one of the country’s largest telecoms service providers, said the company is countering fraud through radio programs and text messages alerting customers and tipping them off against fraudsters. “We continue working with the police and banks on investigations and guide customers on what to do when scammed, which is reporting to the police,” Chirwa said. “We continue reminding customers not to share their pin codes for their Airtel Money wallets, and also we remind them that once they receive a transaction message, they have to verify that it is really originating from Airtel.”TNM’s marketing manager, Tione Kafumbu, told Rest of World that the company blocks numbers involved in fraud and advises customers to use unpredictable security pins. “We have strengthened our SIM swap guidelines,” Kafumbu said. “Currently, when doing a SIM swap, the owner must be present with an ID, and we take his or her picture to prevent some scammers from swapping people’s numbers and stealing from them.”