Eleving Group Kenyan subsidiary, Mogo Microfinance rocked in fraud claims, overcharging clients

The Mogo Microfinance (Mogo Auto Limited) a Kenyan subsidiary of the global financial technology firm, Eleving Group, a vehicle purchasing and access to financial solutions entity projected as a predatory shylock-like lender is embroiled in massive financial fraud claims and heaping complaints of overcharging clients for loan facilities obtained, investigations by The Informer Media Group have established.

In a blow by blow account of complaints formally lodged with the Competition Authority of Kenya (CAK) and a barrage of similar grievances raised by frustrated and aggrieved Mogo Microfinance clients bear consistent grumbles of exaggerated claims, overcharging and charging repayment of loan facilities obtained in US Dollars despite having obtained in Kenya Shillings.

However, so far, neither the financial institutions regulator, the Central Bank of Kenya (CBK) nor the consumer welfare oversight body, the Competition Authority of Kenya (CAK) have stepped in to address the claims.

In one of the complaints registered with the CAK on April 8, 2023 and seen by The Informer Media Group, one of the complainants, despite having made monthly repayment for seven months, when he requested for the balance to clear the loan facility, the amount issued was higher than the principal amount obtained.

“I wish to report a case I am having with Mogo Microfinance. I have a loan facility which is up and running. Though I have noticed that despite servicing the loan, whenever I request my loan balance, the figure I am given is higher than the loan amount despite repaying.

The letter adds that: “I took a loan of Sh658,000. I have made payments for the last seven months in installments of Sh42,000 to Sh46,000. But this week, I asked them to give me a break down just in case I wish to clear the loan and to my alarm, I was told I owe them Sh726,000. I find this absurd as it defies logic as it does not indicate any progress of payment and defies loan calculator. I feel I am being taken advantage of. Kindly assist me get justice in this matter.” A complaint notice to CAK reads in part.

However, when contacted for comment, CAK acting Director General Adano Roba did not respond to our queries sent via mail.

Early this week during the launch of the National Health Insurance Fund (NHIF) cover for boda boda operators dubbed the ‘Boda Boda Care’,Nairobi governor Johnson Sakaja called for president William Ruto’s intervention to reign in on Mogo Microfinance accusing the lender of terrorising and exploiting boda boda owners with high interest rates terming them as predatory lenders.

The governor accused the lender of impounding motorcycles despite operators paying more than Sh200, 000 in some instances.

“For instance, at Mogo and Watu Credit, someone buys a motorbike valued at Sh150, 000 but at the time of finishing paying, the value is Sh300,000. Sometimes, someone struggles to pay his debt, but when he falls sick and has paid Sh200, 000, his bike is taken away, plus his Sh200, 000. That is not fair.” Sakaja told president Ruto.

“We want to ask you to regularise that sector so that even as you give loans, there is a need for humanity. That interest is too high. There is no way a person can pay Sh100,000 and his bike is impounded for failing to repay for a month. Your excellence needs your intervention which will help.” Sakaja.

When contacted for comment, in their initial response, Mogo Microfinance (Mogo Auto Limited) Kenya Country Manager Domas Mineikis threatened to sue if the matter is highlighted.

“Hi, we can give you official answer to all of these as general answers. All of these are already data protection breach from CAK. Generally, if you proceed to publish this, we will pursue both you and CAK in court. Especially these are not true.” Domas responded in a short text message.

Separately, through a response sent via mail by Mogo Microfinance Marketing Manager Gravin Wanjala admitted the microfinance using different currency denomination in loans advanced to their clients.

All Boda Boda loans are issued in Kenya Shillings. For Cars and logbook loans, it’s up to the customer to choose if they want their loan in U$D or KES. We offer lower interest rate for loans issued in U$D. To clarify how the U$D loan works, the payment schedule is always the same e.g., $100 to be paid monthly for the loan term chosen by the customer. This amount is subject to the current forex exchange rate. When the invoice is generated for each loan repayment, the current exchange rate between U$D and KES is considered and converted to the amount that was agreed i.e., $100 to be paid in KES. We convert to KES to make it convenient for customers because majority do not have U$D accounts, and MOGO can offer a lower interest rate since we also borrow in U$D. Also, customers can opt to have their loan in KES which has a higher interest rate but with no fluctuating payments due to forex.” The by Wanjala rejoinder reads in part.