Kenya Cracks Down on Unethical Digital Lending Practices
Kenya’s Competition Authority (CAK) has imposed an $84,120 fine on Mogo Kenya, a subsidiary of Baltic fintech firm Eleving Group, for misleading customers and altering loan terms without consent. This enforcement action underscores ongoing challenges in Kenya’s digital lending sector despite regulatory reforms.
Key Violations by Mogo Kenya
- Unauthorized term changes: Adjusted interest rates from 2.5% (flat) to 3.85% (reducing balance) without customer notice.
- Currency discrepancies: Calculated interest in USD while disbursing loans in Kenyan shillings, leading to overpayments.
- Lack of transparency: Failed to disclose full loan terms and pricing models upfront.
The CAK has ordered Mogo to refund affected borrowers and issued a stern warning against future violations.
Regulatory Backdrop: Kenya’s Digital Lending Reforms
Kenya implemented strict regulations in 2022 to combat predatory lending practices, requiring:
- Full disclosure of all loan terms
- Compliance with data protection laws
- Licensing of all digital lenders (only 85 approved of 730 applicants)
Despite these measures, many lenders continue flouting rules—from harassment to privacy violations.
Industry-Wide Challenges
Multiple lenders face similar accusations:
- Platinum Credit and Premier Credit: Reported for aggressive marketing calls
- Asapkash, Mulla, Azura: Accused of harassing third parties for debt recovery
Mogo’s Response and Market Position
While Mogo claims customers “willingly signed” for USD-denominated loans (discontinued in May 2024), it didn’t address other CAK findings. Parent company Eleving Group—currently pursuing an IPO—reported €106 million revenue in H1 2024.
Why This Matters
This case highlights:
- Regulatory gaps in emerging fintech markets
- Consumer vulnerability to opaque lending practices
- Growing scrutiny of digital lenders in Africa
Kenya’s actions may signal tighter enforcement across East Africa’s booming fintech sector.
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