Asset financiers tighten grip on phone hacking syndicates

ASSET financing firms are stepping up crackdown on theft syndicates who are 'flashing' mobile phones and exposing the "Buy Now Pay Later" firms into massive losses.

Mogo head of device sales Fred Muoka said that since it ventured into phone financing six months ago, it has been stepping up efforts to dismantle the cartels working jointly with security agencies.

Mobile phone hacking syndicates have been exploiting device financing programmes, exposing Buy-Now-Pay-Later (BNPL) lenders to mounting losses.

“We have a department that looks at the data and follows up when payments stop. In some cases, it is not the customer but organised cartels that interfere with the devices,” said Muoka.

The consumer asset financier-Mogo Kenya says it has intensified its internal investigations and tracking systems after discovering organised groups tampering with financed smartphones and reselling them before completing payments.

The crackdown comes as device financing gains popularity in Kenya, allowing consumers to acquire smartphones through small daily instalments, instead of paying the full price upfront.

He was speaking alongside Oppo Communications manager Fredrique Achieng, when the two firms signed a new device financing partnership.

The demand for financed phones has surged over the last six months, but so has fraud.

“Partnering with Mogo allows us to remove affordability barriers and extend the reach of OPPO technology to customers who may otherwise delay or forgo smartphone ownership. This collaboration reinforces our long-term commitment to digital inclusion and to empowering individuals, entrepreneurs, and communities across Kenya,” said Achieng.

The financier revealed that it has already issued over 100,000 phone loans since launching its device financing product six months ago, driven largely by customers who cannot afford to buy smartphones outright.

However, the rapid growth of device financing has also attracted criminal networks that hack or tamper with financed phones to bypass payment tracking systems.

Industry players say the syndicates often acquire phones through intermediaries, flash or alter the devices’ software, and resell them in the secondary market.

Mogo estimates that an average financed phone costs around Sh20,000, meaning even a small batch of stolen or compromised devices can translate into significant losses for lenders.

To combat the problem, the firm says it is working closely with manufacturers and retailers to strengthen device tracking and recovery mechanisms.

The company is also investing in improved data monitoring systems to identify suspicious activity early and track devices that fall into the hands of fraudsters.

Despite the emerging risks, asset financiers remain optimistic that device financing will continue expanding in Kenya, with companies targeting an initial market penetration of 10 to 20 per cent before scaling further.