Mogo, a prominent asset financier has suffered a major setback after the Competition Authority of Kenya ordered it to pay Sh10.9 Million penalty for allegedly engaging in false, misleading representation and unethical conduct against its customers.
The company, which was incorporated in Kenya in 2012, is part of the Eleving Group, an international FinTech company operating in 15 countries across three continents; Europe, Asia, and Africa.
In Kenya, it offers car financing, logbook loans, and offering loans to bodaboda and tuk-tuk operators.
However, recent investigations into the company revealed serious complaints from several customers, prompting the Authority to act.
Investigations into Mogo’s conduct were occasioned by complaints lodged with the Authority by the financier’s four customers on varied dates between May 6, 2023, and April 11, 2024.
Their grievances centered around deceptive practices, including unilateral changes to loan terms and the use of fluctuating foreign exchange rates that resulted in higher repayments than initially agreed.
The first complainant, who had taken a KSh 2.1 Million loan (USD 17,828.16 at the exchange rate of Sh 117 to USD 1) was payable in sixty (60) monthly installments at a 2.6% flat interest rate.
The authority was informed that Mogo changed the repayment terms from a flat interest rate to a reduced balance basis without proper notification, leading to unpredictable payment amounts due to exchange rate changes.
Another customer reported that despite settling a KSh 300,000 loan in July 2021, their final balance was higher by KSh 92,000 than expected because it was calculated in USD rather than KSh.
The complaints continued, with another customer claiming that Mogo financed 50% (Ksh 310,000) of the purchase price of a motor vehicle.
The facility was disbursed in KSh but the loan agreement captured two currencies KSh and USD. The complainant alleged that Mogo explained that the dollar tabulation was for record-keeping.
However, subsequently, Mogo calculated the loan installment amounts in USD and required the complainant to pay in KSh.
Similarly, a fourth complainant experienced significant increases in their loan balance and unapproved changes in interest rates, raising alarms about Mogo’s lending practices. In the matter, the complainant entered into a Sh 517,212 loan agreement with Mogo in June 2022.
The complainant serviced the loan for seven (7) months after which their facility balance was tabulated as Ksh 726,000. The complainant further alleged that Mogo unilaterally varied the interest rate from 2.5% (flat rate) to 3.85% (reducing balance), contrary to the contract terms.
Upon reviewing these complaints, the Authority initiated an investigation and informed Mogo of the allegations.
Mogo’s responses during the investigation included both written and oral submissions, but the evidence ultimately pointed to violations of the Competition Act, specifically regarding clauses prohibiting false or misleading representations, and engaging in unconscionable conduct during issuance and administration of loan products to the complainants.
In addition to the hefty financial penalty, Mogo was directed to refund a total of Sh 344,939 to three customers for excess charges and to address all pending complaints efficiently.
Mogo has also been directed to refrain from misrepresenting facts and engaging in unconscionable conduct when dealing with its clients, amicably resolve all pending complaints before the Authority, and resolve future complaints expeditiously.
