Customers at a banking hall in Nairobi. FILE PHOTO | NMG
Summary
- Privacy International Network says telecoms operator Safaricom’s M-Pesa, M-Kopa and internet-based lenders Tala and Branch are using these platforms to collect crucial data that they deploy while making crucial financial decisions.
- This, the network says, amounts to misuse of their clients’ digital identities and significantly risking their privacy and other fundamental rights.
- Privacy International Network specifically accuses the three Kenyan firms of conducting espionage on customers to determine, among other things, their eligibility for loans.
- Mining smartphones data enables these lenders to generate a broad range of information, including location, call records, and SMSs – often without the knowledge of the customers.
Kenya’s mobile money operators and web-based lenders are
conducting their business in breach of customers’ privacy, a UK-based
consortium of agencies that monitor security of consumers on digital
platforms has said.
Privacy International Network says telecoms operator Safaricom’s
M-Pesa, M-Kopa and internet-based lenders Tala and Branch are using
these platforms to collect crucial data that they deploy while making
crucial financial decisions.
This, the network says,
amounts to misuse of their clients’ digital identities and significantly
risking their privacy and other fundamental rights. Privacy
International Network’s report is based on an assessment of the
financial technology operators’ activities in Kenya and India.
The
survey found that the lenders’ operations are in violation of the very
clients’ rights they had pledged to protect. Privacy International
Network specifically accuses the three Kenyan firms of conducting
espionage on customers to determine, among other things, their
eligibility for loans.
Mining smartphones data enables
these lenders to generate a broad range of information, including
location, call records, and SMSs – often without the knowledge of the
customers.
“There are ways in which companies in the
fintech space in Kenya fail to protect their customers’ data. Some
gather data regularly, even when the customer is not using their
service, and use this to improve their algorithmic decision-making,” the
report says, adding that customers often lack control over the data.
“In
some cases, the algorithms are developed far from Kenya, in California
for instance, raising the question as to what happens when these
companies are sold,” the report says.
Customer
and ex-customer data alike often becomes just another asset to sell
with the company, the report says. Even more important is the finding
that the collected digital data is often illegally used to make
financial decisions against clients.
Privacy
International Network found that based on factors such as how often a
customer calls his or her mother and using call records as well as
contents of the SMSs, a customer can be allowed or denied credit.
“Our
research finds there has been a massive increase in the quantity and
scope of consumer information gathered by financial institutions. This
expansion has been largely unchecked, particularly in developing
countries, while serving the interests of companies and industries,
which are mostly located in developed countries,” the report says.
“Seemingly
irrelevant data, such as text messages and call logs, are now being
considered to justify a consumer’s suitability for various financial
products, including loans. If current trends continue, PI believes it
will become increasingly difficult – and eventually impossible – for
people to use financial services without having to allow access to the
most intimate information about themselves.”
READ: EDITORIAL: Protect privacy of every Kenyan at all times
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