M-Kopa fights techie for unlocking defaulted mobile phones

A mobile phone repair technician, Benjamin Okello, is fighting a court case for allegedly using specialised electronic equipment to hack into M-Kopa's security systems. This allowed mobile phones acquired on credit to remain operational without customers completing their instalments. Investigations by the Directorate of Criminal Investigations linked Okello to the unauthorised alteration of 26 phones belonging to M-Kopa Kenya. Forensic analysis indicated that 365 mobile phones had passed through flashing tools recovered from his repair shop in Mradi area in Mathare, Nairobi.

M-Kopa, a company that finances mobile phones through daily instalment arrangements, reported that some of the devices had been marked lost, while others had their security software manipulated to circumvent restrictions imposed on customers who defaulted on their daily instalments. After a raid, M-Kopa identified 24 of the 29 phones recovered from Okello's premises as belonging to the company. Twenty-three of the phones had allegedly been tampered with to defeat its payment control mechanisms. A further examination identified 18 additional phones associated with M-Kopa's financing arrangements, valued at Sh303,487.

M-Kopa's global fraud investigations manager, Edgar Samba, stated that the company uses software to remotely restrict the use of financed devices when customers default on their payments. However, the financier experienced cases where financed phones were stolen or their security software interfered with, allowing customers or third parties to continue using the devices without meeting their payment obligations. The company said it has helped nearly five million customers access over Sh210 billion in credit to buy items like smartphones, solar power systems, and health insurance.

The police raided Okello's shop and arrested him, recovering 71 mobile phones alongside computers, laptops, external hard drives, and specialised diagnostic and flashing equipment. The equipment was subjected to forensic examination by the DCI, which established that hundreds of phones had passed through the recovered tools. M-Kopa stated that the equipment was capable of interfering with the security software installed in its devices, enabling the restrictions imposed on financed phones to be bypassed.

Okello challenged his arrest and prosecution, arguing that the police relied on unsubstantiated claims by the mobile phone financier. He claimed that the phones recovered from his premises belonged to customers who had taken them to his shop for diagnosis, repairs, software servicing, and replacement of components. Okello maintained that he had operated a legitimate repair business for several years, routinely receiving devices from customers and issuing job cards or receipts before retaining them pending collection.

The High Court dismissed Okello's constitutional petition and allowed the criminal trial before a Makadara court to proceed. The court stated that Okello's operation of a repair business did not immunise him from criminal investigations. The court added that the mere discovery of mobile phones and diagnostic equipment at his premises could not, without additional circumstances, establish criminal conduct.

The police charged Okello with being in possession of suspected stolen property contrary to Section 323 as read with Section 36 of the Penal Code. Okello's case raises concerns about the security of mobile phones financed through instalment arrangements and the role of repair technicians in potentially facilitating or preventing device tampering.

Key points

• M-Kopa has helped nearly five million customers access over Sh210 billion in credit.
• The company's loan recovery hinges on switching off gadgets that are in default.
• Okello's case highlights the challenges in balancing device security with customer needs in mobile phone financing arrangements.