Inside Senators' fight for easy, faster reversal of money sent to wrong recipient

Senators push for faster reversal of wrong mobile money transfers. [iStockphoto]

Senators have raised concerns over the failure to protect consumers who have lost funds through erroneous mobile transfers, such as M-Pesa and other mobile platforms.

They argued that in many instances, affected consumers are left to pursue recipients directly with limited support from service providers, notwithstanding the fact that the transactions occur on platforms owned, operated and controlled by the service providers who also earn revenue from the transactions.

Nandi Senator Samson Cherarkey sought a statement from the Senate Committee on Information, Communication and Technology regarding the protection of consumers who lose funds through erroneous mobile transfers, particularly on M-Pesa and other mobile money platforms.

Nandi Senator Samson Cherarkey. [File, Standard]

Review regulations

“Many Kenyans continue to lose money after sending funds to unintended recipients through mobile money platforms. In many instances, the affected consumers are left to pursue the recipients directly with limited support from service providers,” Cherarkey told the House. 

Speaking on the floor of the House, the senator said the courts have addressed related questions on mistaken payments, recovery of funds and duty of care owed by financial and mobile service providers. 

He gave the example of the Kingdom Bank Ltd vs Alice Wanja of 2024 case, where the court held that money paid by mistake is recoverable and that the receiving institutions are expected to act expeditiously with disputed funds. 

He told the House that in Safaricom PLC vs Kafwa (2023), the court affirmed that Safaricom owes its customers a duty of care in relation to services provided on its platform. 

“It is, therefore, necessary to review the existing regulatory framework, including the roles of the Central Bank of Kenya, the Communications Authority of Kenya and the Competition Authority of Kenya in ensuring mobile money platforms provide remedies to affected consumers,” said Cherarkey. 

He sought information on the number of complaints received by the regulators on erroneous mobile money transfers, including the total value of funds reported as lost, recovered or unrecovered since 2020. 

He wants the House informed of the existing procedures and timelines applied by Safaricom and other mobile service providers in tracing, freezing, reversing or recovering funds sent erroneously upon notification by affected consumers. 

Cherarkey said the Senate should be informed of the legal, technical and operational limitations, if any, that prevent the service providers from freezing or reversing erroneous transactions within a reasonable time after notification. 

Nominated Senator Esther Okenyuri said while Safaricom has tried to improvise ways someone can get their money back, most of the time it is dragged, and by the time you send a message, the money has already been used on the other side. “The speed at which someone gets a reprieve needs to be looked into.”

She said there have to be internal ways in which banks can collaborate so that the person affected is able to quickly get redress, and matters forwarded to the police are quickly expedited. 

Tana River’s Danson Mungatana also asked the ICT committee to look at the possibility of recommending an easier procedure for transferring money in the phones of deceased persons to relatives.