Eleving Group Kenyan subsidiary, Mogo Auto fined Sh10.8million for false and misleading loan terms
The Competition Authority of Kenya (CAK) has slapped 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 with a fine of Sh10.85million over false or misleading representation and unconscionable conduct against its customers.
The authority further ordered Mogo to refund three customers Sh344,939, which was paid in excess of repayment of their loans and the difference in the dollar exchange rate applied during the loan issuance.
The regulator also directed Mogo to refrain from misrepresenting facts and engaging in unconscionable conduct when dealing with its clients.
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.
The first complainant alleged that they applied for a loan in June 2022.
The facility of Sh. 2,100,000, (USD 17,828.16 at the exchange rate of Sh. 117 to USD 1) was payable in sixty (60) monthly instalments at a 2.6% flat interest rate.
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 shilling.
This adjustment, they claimed, caused payment of unpredictable amounts due to foreign exchange fluctuations.
The second complainant claimed taking a Sh. 300,000 facility in July 2021.
After repaying for twenty (20) months, the complainant requested for a statement with the aim of settling the loan in full. The loan statement indicated a balance of Sh392,000.
In addition, the amount repayable had been computed in USD despite being disbursed in Kenya Shillings.
The complainant settled the loan, but allegedly paid more than contracted.
The third complainant asserted that Mogo financed 50 per cent (Sh310,000) of the purchase price of a motor vehicle.
The facility was disbursed in Kenya Shilling, but the loan agreement captured two currencies shilling and US dollars.
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 shilling.
Further, the complainant claimed Mogo did not furnish them with the loan agreement and introduced a new document (General Provisions), which was not availed during the initial negotiations.
The fourth complainant entered into a Sh517,212 loan agreement with Mogo in June 2022.
The complainant serviced the loan for seven months after which their facility balance was tabulated as Sh726,000. As was the case with the other complainants, the loan was disbursed in shilling but repayable in USD, exposing them to higher instalments.
The complainant further alleged that Mogo unilaterally varied the interest rate from 2.5% (flat rate) to 3.85 per cent (reducing balance), contrary to the contract terms.
