Kenya’s Competition Authority of Kenya (CAK) has fined Mogo Kenya, a subsidiary of Baltic lender Eleving Group, $84,120 for misleading customers and altering loan terms without their knowledge. The fine underscores ongoing unethical practices by some digital lenders in Kenya, despite new laws designed to curb such behavior.
Mogo Kenya was found to have violated competition laws by secretly changing loan terms, which forced clients to pay additional interest. The CAK investigation, which followed customer complaints, revealed that Mogo had, in some instances, calculated interest in U.S. dollars while issuing loans in Kenyan shillings, resulting in extra repayments. In another case, Mogo unilaterally changed the interest rate from 2.5% to 3.85% without informing customers.
This fine brings to light how several digital lenders continue to flout regulations despite the introduction of the Digital Credit Providers Regulations in 2022. These regulations require lenders to comply with anti-money laundering laws, protect consumer privacy, disclose loan terms upfront, and obtain operating licenses. Prior to this law, many digital lenders exploited regulatory gaps, imposing high-interest rates, violating privacy rights, and engaging in aggressive debt collection practices, often leaving borrowers in distress.
Mogo Kenya has been ordered to refund the excess amounts charged to affected customers. The company, which also operates in Lithuania, Estonia, and several other countries, defended itself by stating that customers had willingly signed up for dollar-denominated loans, though it did not address allegations of changing terms without consent.
As of 2024, Kenya has licensed 85 digital lenders out of over 730 applications since the regulation came into effect. Despite these efforts, complaints continue to emerge regarding digital lenders who violate privacy rights, with reports of harassment and unethical debt recovery practices involving companies such as Platinum Credit, Premier Credit, and several mobile loan apps.
This case highlights the need for stricter enforcement of regulations to protect Kenyan borrowers from exploitative practices.