Last week, the Competition Authority of Kenya (CAK) fined Mogo Kenya Ksh 10.9 million for misleading its customers. The Authority accused Mogo of engaging in false and misleading representation and unconscionable conduct against its customers.
Mogo specializes in car financing and logbook loans has been ordered to refund 3 loan customers a total of Ksh 344,030. This is to cover the excess charges they incurred during repayment as well as any discrepancies in the dollar exchange rate applied during loan issuance. The CAK reports that it has been investigating Mogo since May 6, 2023 after it received complaints by 4 customers.
“The first complainant alleged that they applied for a loan in June 2022. The facility of Ksh.2,100,000, (USD 17,828.16 at the exchange rate of KES. 117 to USD 1) was payable in 60 monthly instalments at a 2.6% flat interest rate,” said CAK in a statement.
“The complainant accused Mogo of adjusting the terms from flat rate to reducing balance basis, and that the interest payable was calculated in USD, despite the facility being disbursed in shillings. This adjustment, they claimed, caused payment of unpredictable amounts due to foreign exchange fluctuations.”
The second complainant said they took a loan of ksh 300,000 in July 2021. After 20 months of repayment requested a statement to settle the loan and it showed a balance of Ksh 392,000 which was computed in USD even though the initial loan was in Kenya shillings. The complainant settled the loan but paid more than what was agreed.
The third and fourth complainants have a similar story where they get the loan in shillings and find it is later computed in USD.
After reviewing the complaints, CAK initiated its investigations and informed Mogo of the allegations seeking a response from them. CAK said, “Upon analyzing the evidentiary information from the complainants and the accused party, the Authority concluded that Mogo had violated the Act, specifically clauses prohibiting false or misleading representations, and engaging in unconscionable conduct during issuance and administration of loan products to the complainants.”
“Upon being issued with a Notice of Proposed Decision by the Authority, Mogo indicated amenability to settle the matter administratively. Upon considering the foregoing, the Authority and Mogo entered into a settlement agreement in which the financial services provider has been ordered to pay a penalty of Ksh.10,851,473,” said CAK.
Mogo was also ordered to pay the first complainant Ksh 500,000 as the final outstanding loan amount, refund the second complainant Ksh 108,745 for excess charges and refund the third and fourth complainants Ksh 80,915 and Ksh 155,279 respectively for the forex exchange difference applied during loan application and issuance.
