E-commerce company, Jumia is currently enmeshed in a case of internal fraud involving its affiliate marketing programme, otherwise known as J-Force.
The alleged fraud, purportedly running into billions of naira, is also said to have attracted the attention of the Economic and Financial Crimes Commission (EFCC). Confidential sources reveal that some staff of Jumia may have been picked up for questioning by the anti-graft agency. This was after some of the agents involved began to petition the Commission.
Jumia’s affiliate marketing programme purportedly offers individuals a chance to earn money through commissions on sales of the company’s products. Furthermore, the Jumia website confirms the existence of the scheme. It states: “Get on the JForce train today and earn money through commissions by selling items supplied by Jumia. You can also make money as you recruit new sales consultants. This is an opportunity to be your own boss and take orders from no one else but yourself as you have complete control over your activities.”
However, trouble started when Jumia began to place an embargo on the accounts of some of its agents. Investigations reveal that the company had detected some form of insider fraud and collusion between the marketers and merchants. A source disclosed that agents on Jumia’s Affiliate Programme usually enjoy juicy commissions, often higher than Jumia’s margins on products. As a result, some of them began colluding with merchants to place fictitious product orders, running into millions in order to brow-beat the company and earn heavy commissions.
The ugly development led to Jumia slowing down its affiliate marketing programme in recent months. Following the suspension of a number of accounts, agents are now accusing Jumia of ripping them off their entitlements.
Efforts to seek clarification from Jumia via email have remained unsuccessful.
One of the agents, who spoke on condition of anonymity, disclosed that some agents earn up to N40m monthly in commissions. The agent added that other marketers may have earned much more, even he decried the actions of the company.
“This suspension of accounts has been going on for a while but I never knew it could happen to me. Usually, as an agent, you can log into the Jumia Affiliates Dashboard to check the status of your commissions. However, I noticed that all my commissions had been frozen.
“From my enquiries, I discovered that I was not the only one affected. Jumia has been doing the same thing to other hard-working Nigerians who put in their effort to work for them. I tried contacting their Customer Service and all I was being told does not make sense to me. They promised to investigate and later told me that all the orders I placed were JForce orders. This is a clear case of fraud.”
Another agent disclosed that the action of the company was a calculated action to deny marketers of the huge commissions they had generated.
“Their claim that all the orders placed were JForce orders which most of us don’t know what JForce is all about is in itself fraudulent on their part. Apparently, Jumia has seen that affiliate marketers are making so much money from the programme. Maybe they can’t afford to pay it and then they are looking for an excuse. Everyone needs to join hands with us and say enough is enough.”
Jumia had previously admitted seller fraud and fraudulent transactions with legitimate consumers on its platform. In a prospectus filed with the United States Securities and Exchange Commission (SEC) before its NYSE IPO, Jumia disclosed that sellers are also engaging in fictitious or “phantom” transactions with themselves or collaborators in order to artificially inflate their own ratings on its platform, build their reputation and search results rankings.
Moreover, the company seems helpless in controlling this menace.
Jumia revealed that although it had implemented various measures to detect and reduce the occurrence of fraudulent activities on its platform, there can be no assurance that such measures will be effective in combating fraudulent transactions or improving overall satisfaction among sellers, consumers and other participants.
In addition, the company reported that thugs broke into its warehouses in Kenya in late 2018, and stole merchandise with a value of approximately €500,000.
The foregoing calls into sharp relief the claims by Citron, an intelligence equity research company, that Jumia’s IPO was based on falsehood and ‘worthless’.
In the preamble to the report, Citron said:
“In 18 years of publishing, Citron has never seen such an obvious fraud as Jumia. As the media in the US is naively anointing Jumia the “Amazon of Africa”, the media in its home country of Nigeria has a plethora of articles discussing the widespread fraud in this Nigerian company. Not even that elusive Nigerian prince can cover this one up.
Jumia is the worst abuse of the IPO system since the Chinese RTO fraud boom almost a decade ago. Worse than being “the most expensive” US-listed e-commerce company, Jumia reported financials to show us a stagnant business that has burned through $1 billion and has moved the sucker’s game to the US Markets.”