Three men running an M-KOPA phone unlocking syndicate were detained in Eldoret, Uasin Gishu County, on August 5, 2025, following a targeted raid by the National Police Service (NPS) and M-KOPA liaison personnel. The three men who help people unlock their M-Kopa phones before clearing loans were detained after an undercover operation.
The suspects, caught reprogramming 28 assorted mobile phones, including M-KOPA devices, were allegedly helping customers unlock hire-purchase smartphones before clearing loans, bypassing the company’s security features like Samsung’s Knox Guard.
The operation, uncovered after a public tip-off, revealed high-end equipment used to alter IMEI numbers and evade payment obligations, raising concerns about fraud in Kenya’s digital financing sector.
M-KOPA Phone Unlocking Syndicate
The M-KOPA phone unlocking syndicate, operating from a repair shop near the Eldoret Shuttle booking office, was dismantled after authorities seized two HP laptops, two CPUs, seven hard drives, a Pandora Box, a dongle, and a JTAG device, tools capable of reprogramming phones to bypass M-KOPA’s pay-as-you-go lock system.
Radio 47 News reported that the suspects tampered with devices to allow usage without daily payments, defrauding M-KOPA, which finances smartphones through a KES 3,500 deposit and KES 60 daily instalments via M-Pesa.
The syndicate’s activities, linked to a broader criminal network, have prompted M-KOPA to strengthen its anti-fraud measures, including AI-driven payment tracking, as noted in a 2023 Microsoft News report.
Eldoret Phone Hacking Racket
The Eldoret phone hacking racket targeted M-KOPA’s locked smartphones, primarily Samsung and Nokia models, which require daily payments to remain active.
Customers failing to pay KES 60 daily face automatic locking via Samsung’s Knox Guard, but the suspects used advanced tools to alter IMEI numbers and disable security features, allowing resale or unauthorised use.
The operation, described as “sophisticated” by NPS, involved stolen or credit-bound phones, with 28 devices recovered during the raid. The move expressed public outrage, with users decrying the exploitation of low-income Kenyans reliant on M-KOPA’s financing for smartphone access.
The arrests highlight the challenges of securing digital credit systems in Kenya’s informal economy.
M-KOPA Hire-Purchase Fraud
M-KOPA hire-purchase fraud has surged as defaulters seek ways to bypass the company’s remote locking system, which deactivates phones for non-payment.
M-KOPA, a fintech serving over 5 million customers across Kenya, Uganda, Nigeria, Ghana, and South Africa, reported a 10% default rate in 2023, per TechCrunch.
The Eldoret syndicate’s activities, enabling users to unlock devices without clearing loans, exacerbate financial losses, with M-KOPA spending KES 5.2 billion to trace 47,625 hardcore defaulters, according to Business Daily.
The company’s model, requiring a KES 3,500 deposit and daily payments, aims to build credit history, but fraud undermines its sustainability, prompting calls for stricter regulations.
Kenya Digital Financing Crime
Kenya’s digital financing crime landscape has grown with the rise of buy-now-pay-later (BNPL) models like M-KOPA’s, which has disbursed over $1.5 billion in credit since 2012.
The Eldoret arrests reflect broader issues, with syndicates exploiting vulnerabilities in IoT-connected devices, as noted in a 2020 TechCabal report on M-KOPA’s CRM system.
The Central Bank of Kenya’s 2021 Digital Credit Providers Regulations aim to curb predatory practices, but enforcement remains challenging, with only 10 digital lenders licensed by September 2022.
M-KOPA Anti-Fraud Measures
M-KOPA’s anti-fraud measures include AI and machine learning on Microsoft Azure to monitor repayment patterns, as highlighted in a 2023 Microsoft News report.
The company’s app allows customers to manage payments and access loans of KES 4,000–15,000, but delays in unlocking phones after payments, noted in Google Play reviews, fuel demand for illegal unlocking services.
M-KOPA’s collaboration with Safaricom and use of M-Pesa ensures traceability, yet the Eldoret syndicate’s ability to bypass Knox Guard shows the need for enhanced security.
The company’s $255 million funding in 2023, led by Standard Bank, supports expansion but also highlights the urgency of addressing fraud to maintain investor confidence.
M-KOPA’s role in financial inclusion, serving low-income earners with smartphones and loans, is critical, but fraud threatens its mission.
The detained suspects, now under investigation for links to a larger syndicate, face charges of theft and fraud, with NPS vowing to crack down on similar operations.
