Court documents indicate that the plaintiffs want MTN to be regulated like a financial institution.
MTN Uganda has been dragged to Court over mobile money and SUKUMA SMS promos, citing risk of loss of money by the public because the service is not regulated.
Legislator Abdu Katuntu and business woman, Kimberly Kasana sued MTN seeking court to declare that its mobile money service is a financial institution and an order directing the telecom to account and refund all the monies made from the promotions.
Mr Katuntu, alleges that through the mobile money service, MTN has become a non-bank e-money issuer which is not prudently regulated like other financial institutions in the country thus contradicting the Uganda Communications Commission Act.
“The mobile money service has grown steadily over the years with an e-float of more than a trillion shilling in the year ending 2011 and yet there are no controls and safeguards to ensure that customers’ funds deposited with the defendant are not endangered or lost,’ reads part of the claim filed through Muwema and Mugerwa Advocates.
According to court documents the case is seeking to declare that MTN’s promotions under the name and style of ‘SUKUMA SMS’ and other promotions amount to gaming under the law.
MTN recently reported a loss of billions of shillings from its mobile money platform underscoring the telecom’s need to plug loopholes in its systems.
Mr Katuntu and Ms Kasana allege that MTN under the guise of sales promotion activities have been involved in gaming under a purported sales promotion game called ‘SUKUMA SMS’ which is outside the scope of the telecommunications license granted by UCC.
“That activities of the defendant (MTN) in respect of mobile money and gaming have far reaching effects on the economy and general public if not properly regulated because the defendant has financial access to the majority of Ugandans including the unbanked population through its branchless network,” reads part of the petition.