Kenya Fines Fintech Eleving’s Local Unit In Digital Lending Probe
TLDR
- Kenya's Competition Authority fines Mogo Kenya, subsidiary of Eleving Group, for altering loan terms and misleading customers, highlighting unethical practices among digital lenders despite regulations
- Mogo found guilty of changing loan terms secretly, leading to excess repayments and increased interest rates without customer knowledge
- Despite strict laws for digital lenders in Kenya to protect consumer privacy and disclose terms, unethical practices continue among various lenders
Kenya’s Competition Authority (CAK) has fined Mogo Kenya, the local subsidiary of Baltic lender Eleving Group, $84,120 for misleading customers and altering loan terms without their knowledge. The fine highlights ongoing unethical practices among digital lenders in Kenya, despite regulations introduced in 2022 to curb such behavior.
Mogo was found guilty of secretly changing loan terms, forcing clients to pay additional interest. In one instance, the company calculated interest in USD while loans were issued in Kenyan shillings, leading to excess repayments. In another case, Mogo unilaterally increased interest rates from 2.5% to 3.85%. The company has been ordered to refund affected customers and was issued a warning by the CAK.
Kenya has enacted strict laws for digital lenders, requiring them to protect consumer privacy, disclose all terms, and obtain licenses. Mogo, which offers vehicle and consumer financing in Kenya, is among 85 licensed digital lenders out of 730 applicants since 2022.
Key Takeaways
The fine imposed on Mogo Kenya underscores the persistent challenges in regulating Kenya’s burgeoning digital lending industry. Despite stricter regulations, many lenders continue to exploit loopholes, underscoring the need for stronger enforcement to protect consumers from unethical practices. Other lenders, such as Platinum Credit and Premier Credit, have also been accused of violating customer privacy and engaging in predatory practices. These incidents highlight broader issues within Kenya’s digital lending ecosystem, where customer exploitation and privacy violations remain widespread.
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