eCommerce company, Jumia Kenya, has announced that it lost KSh 21.2 million ($150,000) to fraud.
The company said one of its employees stole the funds by manipulating vendor payment records.
Jumia Kenya, in a Berlin-based Jumia Technologies AG filing published in May 2023, says it discovered the fraud in September 2022.
“In September 2022, we discovered that an employee in Kenya manipulated certain vendor payment entries and misappropriated payments in 2021 and 2022.”
Jumia Technologies AG is the trading group under which Jumia Kenya falls. It lists some main risks that could hurt its business, including failure to deal with fraud effectively and fictitious transactions made on its platform.
Jumia Kenya says that although vendors can list their products on the platform and sellers can order and pay for goods before or after delivery, it can be challenging to anticipate, identify, and deal with fraudulent activities.
The business claims it is due to the industry’s fragmentation and the large number of users on its platform.
While the financial impact, in this case, was not material (under $150,000), any similar illegal, fraudulent, or collusive activities by its employees could significantly hurt its operations, finances, results, and prospects. They could also expose the company to legal risk or adverse publicity.
In 2019, the eCommerce platform reported losing at least KSh118 million in two years due to consumer cyber fraud and robbery. A break-in at its Kenyan warehouse resulted in the loss of KSh56 million in merchandise.
What’s more, a group of customers fraudulently used electronic payment providers to buy goods in 2017, costing the company KSh62 million.
