Kenya rights groups say move to block phone fraud is surveillance

Pedestrians pass an advertisement for Samsung Electronics Co’s Galaxy Z Fold 5 and Z Flip smartphones on a Safaricom Plc store in Nairobi, Kenya. According to the Kenya’s Anti-Counterfeit Agency, Kenya is a major hub for counterfeit goods in Africa, with smartphones making up more than half of all fake products in the country. — Bloomberg

NAIROBI: Kenyan digital rights campaigners warn a phone tracking programme the government said it was pressing ahead with to trace counterfeit devices and curb fraud could lead to increased state surveillance and invasion of privacy.

Kenya’s Ministry of Information, Communication and the Digital Economy Eliud Owalo said this month that the government intends to go ahead with plans to roll out a Device Management System (DMS) to allow authorities to access the unique identification number of mobile phones and block services to fake devices.

Owalo said the measure would curb the widespread proliferation of counterfeit and stolen devices in the east African country, prevent the loss of millions of dollars through evaded taxes and fraudulent calls, and boost cybersecurity.

Kenya imposes customs and excise duties on imported phones as well as a retail sales tax. It also taxes Internet usage and money transfer transactions conducted via mobile phones, a widely used method to pay for goods and services in the country. But campaigners, who lost a six-year legal battle in April against the Kenyan government to halt the introduction of the DMS, argue the technology will violate users’ privacy rights.

“It’s a form of spyware,” said David Indeje from KICTANet, a Kenyan technology think-tank.

“At the heart of it, there are serious privacy concerns. The government and other third parties such as telecoms operators will have access to users’ phone data, including calls, messages and financial transactions,” he said.

An official from the Communications Authority of Kenya (CAK), which is implementing the DMS, said accusations that the technology violated citizens’ privacy were misinformation.

“The aim of the DMS is to isolate and deny services to the illegal devices ... it does not access subscriber personal information and data,” said the official, who declined to be named as he was not authorised to speak to the media.

Authorities have not said when the DMS will be introduced.

Fake phone risks

Telecom industry group GSMA said there were 489 million unique mobile subscribers in Africa in 2022 – about 43% of the population – and this is set to rise to 692 million by 2030.

Smartphone affordability however remains is a key barrier. While the cost of smartphones has reduced significantly, with an influx of devices for less than US$100 (RM461), many still seek high-end handsets from well-known brands, but without the cost.

According to the Kenya’s Anti-Counterfeit Agency, Kenya is a major hub for counterfeit goods in Africa, with smartphones making up more than half of all fake products in the country.

In Nairobi’s central business district, small booths inside run-down office buildings and malls offer a wide array of cheap electronics, including counterfeit Apple and Samsung phones.

“I sell the authentic phones, but I don’t get the sales as they are too expensive for most people,” said one shopkeeper. “Customers want fancy, but cheap.”

But these unlicensed devices result in substantial economic losses through tax evasion. One study found that Kenya is losing more than 3 billion Kenyan Shillings ($20 million) annually in uncollected taxes from the sales of fake phones.

The counterfeit handsets, most of which come from China, also present serious security risks as they often lack safety features, encryption and protection against cyber threats.

Owalo told a parliamentary committee this month that the DMS would help to reduce such risks.

“The influx of counterfeit, substandard and non-type approved devices in the country presents a huge problem to our society given the nature of mobile phone devices and their importance to us,” said Owalo.

“The Communications Authority of Kenya has set out to develop an effective technological solution to control the threat through the deployment of a system to automatically detect and disable end-user equipment that does not meet set criteria,” he said.

According to CAK, the DMS will track handsets through their unique identification number, or IMEI number, and deny services to counterfeit, substandard and stolen phones.

This will also help to curb SIM Box fraud, or interconnect bypass fraud, which illegally diverts international calls through the Internet to avoid paying overseas fees, said CAK.

Surveillance concerns

Since the DMS was first announced in 2016, civil society groups have voiced concerns over privacy violations and state surveillance and sought to halt it through the courts.

The Kenya Human Rights Commission (KHRC) and rights groups argued the DMS was introduced without public consultation or participation.

The DMS, it said, “would unduly, unreasonably and without justification” limit the rights and fundamental freedoms of Kenyans, including the right to privacy.

Many people, including lawyers, doctors, counsellors, religious leaders and journalists hold confidential information relating to their clients on electronic devices, the KHRC said.

Kenya's biggest telecoms operator Safaricom, cited as a respondent in a high court petition, said its subscribers were at risk of having their personal details, communications, social media messaging and data exchanges subject to interference.

In 2018, the high court blocked the implementation of the DMS, deeming it both “a threat to the right to privacy” and “a gross violation” of subscribers’ consumer rights.

The decision was then however overturned by the Court of Appeal in 2020, which ruled that it was too early to state that the DMS had violated any constitutional provisions as it had not yet been introduced.

A subsequent appeal by campaigners was dismissed by the Supreme Court in April this year.

Rights campaigners however insist the technology is intrusive and unnecessary, adding that the CAK is overstepping its mandate as telecoms regulator and should allow the Anti-Counterfeit Agency and Bureau of Standards to lead the fight against fake products.

Authorities should find other ways to curb the spread of counterfeit phones without infringing privacy, rights groups said.

These could include enhancing customs and border controls, engaging consumers through awareness campaigns and reporting mechanisms, conducting raids and collaborating with ecommerce platforms to disrupt supply chains, they said.

“We really don’t see the need for it, other countries have the same challenges of counterfeit phones, but they are not using this king of technology,” said Damaris Onyancha, KHRC’s senior programme advisor for legal affairs and human rights monitoring.

“We will be watching closely as the DMS is rolled out and remain on high alert for any violations to the rights of Kenyans.” – Thomson Reuters Foundation

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