Jumia Kenya, an e-commerce company, has announced that it lost KSh 21.2 million ($150,000) to fraud. The company said one of its employees stole the funds by manipulating vendor payment records.

Jumia Kenya, in a filing published in May 2023, says it discovered the fraud in September 2022. The employee is alleged to have manipulated vendor payment entries and misappropriated payments in 2021 and 2022.

Jumia Technologies AG, the trading group under which Jumia Kenya falls, lists failure to deal with fraud effectively and fictitious transactions made on its platform as some of the main risks that could hurt its business.

Jumia Kenya says that although vendors can list their products on the platform and sellers can order and pay for goods before or after delivery, it can be challenging to anticipate, identify, and deal with fraudulent activities. The company says this is due to the industry's fragmentation and the large number of users on its platform.

While the financial impact of this fraud was not material, any similar illegal, fraudulent, or collusive activities by its employees could significantly hurt Jumia Kenya's operations, finances, results, and prospects. They could also expose the company to legal risk or adverse publicity.

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This is not the first time that Jumia Kenya has been the victim of fraud. In 2019, the company reported losing at least KSh118 million in two years due to consumer cyber fraud and robbery. A break-in at its Kenyan warehouse resulted in the loss of KSh56 million in merchandise. What's more, a group of customers fraudulently used electronic payment providers to buy goods in 2017, costing the company KSh62 million.

Jumia Kenya says that it is taking steps to improve its fraud prevention measures, including implementing new security controls and training its employees on how to identify and report suspicious activity. The company says that it is also working with law enforcement to investigate the recent fraud case.

This incident highlights the challenges that e-commerce companies face in preventing fraud. As the e-commerce industry continues to grow, it is likely that we will see more cases of fraud. It is important for e-commerce companies to be vigilant and to take steps to protect themselves from fraud.