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Safaricom has Been Sued for Using Customer Money to Lend Out as Overdrafts

East Africa’s leading telecommunications company Safaricom is in trouble. Pressure is mounting on it, with two major lawsuits from its customers now demanding accountability from the telco giant. The Nairobi-based firm has in the past few months faced renewed criticism over the credibility of its mobile overdraft facility Fuliza, which runs on the popular mobile money service M-Pesa, and rising cases of SIM swap fraud targeting Fuliza limits. Three Kenyan M-Pesa users have filed a class-action suit against Safaricom, arguing that Kenya’s most profitable company uses its customers’ money to engage in profit-making financial lending services without consent, despite it not being registered as a bank. This is in contravention of section 2 (1) of the country’s Banking Act. They say that in spite of making profit through its 15-year partnership with the country’s KCB and NCBA commercial banks to offer lending services, Safaricom is yet to pay any interest to its more than 32 million M-Pesa account holders, whose money “it uses to lend and earn profits.”