Jumia Kenya, an e-commerce company, has revealed that approximately $150,000 (Sh21.2 million) was stolen by one of its employees through the manipulation of vendor payment records.
According to reports by Business Daily, “This incident highlights the risk of fraud that the platform faces.”
It is reported that Jumia Technologies AG, headquartered in Berlin, disclosed this information in its recent filing with US regulators.
The company stated it discovered the fraudulent activity in September of last year.
“In September 2022, it came to our attention that an employee based in Kenya had tampered with specific vendor payment records and unlawfully diverted payments during the years 2021 and 2022,” read part of the report.
Jumia’s e-commerce platform allows vendors to list their products, and buyers can place orders and make payments either before or upon delivery.
The company acknowledges the challenge it faces in anticipating, detecting, and addressing fraudulent activities due to the large number of participants on its platform and the fragmented nature of its business.
“Although the financial impact of this specific case was not significant (less than $150,000), Jumia emphasizes that any illegal, fraudulent, or collusive activities by its employees could have a substantial adverse effect on its business, financial condition, operations, and prospects,” Jumia noted.
Additionally, such activities could lead to liability or negative publicity.
Jumia Technologies AG, the parent company of Jumia Kenya, considers its inability to effectively deal with fraud and fictitious transactions conducted on its platform as key risks that could harm its business.
Fraud has become a growing concern for many companies in Kenya, as technology presents both opportunities, such as cost management and faster service delivery and challenges.