Start ups

Small South African fintech start-up sues Facebook

Read time 3min 30sec

Small South African-based fintech start-up company is taking social media giant Facebook to court over its suspension from the platform.

In a statement, the fintech firm says: “ has served a notice of motion filed at the Gauteng Local Division High Court in Johannesburg to Facebook Inc on the 19th November 2019.”

It says the notice was served following two incidences where Facebook suspended and/or closed two promotional pages created for PrepaidWealth on the Facebook platform.

Describing how the PrepaidWealth platform works, the company says: “ will get you to make money from the airtime, data and other services that you consume and/or sell from this platform.

“You can consume these services as a group or as an individual. If you consume the services as a group, the discounts that you accumulate from consuming/selling the services will be allocated to the group. Whereas, if you consume the services individually, the accumulated discounts/profits will be yours. The accumulated discounts can be withdrawn in cash once your group account/individual account reaches R200.”

PrepaidWealth believes the reasons for suspending and/or closing the pages are unfounded since there was no breach of community rules set out by Facebook.

It also believes the misunderstanding by Facebook derives from the start-up’s business model.

Facebook declined to respond to questions sent by ITWeb over the issue.

The social media doyen is no stranger to litigations. In July, the US Federal Trade Commission slapped it with a record $5 billion fine over privacy breaches.

Earlier this year, it agreed to pay a $100 million fine to settle charges by the US Securities and Exchange Commission that it misled investors for more than two years about the misuse of its users’ data.

According to the start-up, the PrepaidWealth model is designed to give a portion of the profit margin or discount back to the customer when they purchase products from the platform.

It says PrepaidWealth gives 80% of the discounts/margins from the distributor back to the customer.

The remaining 20% is kept by the platform, it notes, adding the products sold on PrepaidWealth include data bundles, cellphone airtime, etc.

There is also an option to accumulate the discounts individually or as a group and withdraw/claim them as cash, says the company.

“ believes that, as a result of the model promising cash from the accumulated discounts, Facebook’s bots have mistakenly classified the pages as malicious pages,” the company says.

It claims PrepaidWealth has, on numerous occasions, tried to appeal the suspension. “However, the bots or the person who was looking at the matter failed to grasp the business concept.

“South Africa’s Facebook office was not helpful either because people with support queries are not allowed to go past the security personnel at the gate of the office park where Facebook is based. As a result, was left with no other choice but to serve a notice of motion filed at the high court.”

The notice of motion contains three terms, the fintech firm says. The first is to declare the reason for suspending/closing the pages unfounded.

The second term is for Facebook to pay for compensatory damages. The third term is to reinstate the pages.

“It is quite unfortunate that we had to resort to serving a notice of motion to Facebook. We tried our best to reach out to Facebook,” says Gabriel Nkuna, co-founder of PrepaidWealth.

“However, it seems like Facebook’s entire online customer engagement has been automated to use bots. While we are a big fan of automation and bots, we believe that for paying customers like ourselves, human intervention is required when there is a stalemate from a bot.”

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