NAIROBI, Kenya- Mogo, a leading asset financier in Kenya, has found itself on the wrong side of the law after the Competition Authority of Kenya (CAK) slapped the company with a Sh10.9 million fine.
The penalty follows an investigation into customer complaints accusing Mogo of false representation, altering loan terms, and engaging in unfair practices.
The CAK’s investigation, triggered by four customer complaints, uncovered instances of fluctuating foreign exchange rates and overcharging that left clients with unexpected financial burdens.
In response, the regulator has ordered Mogo to take corrective measures, including reimbursing customers and improving its internal processes.
The trouble for Mogo began in May 2023 when several customers reported discrepancies in loan repayments and interest calculations.
According to one complainant, a loan of Sh2.1 million disbursed in Kenyan shillings was subject to a dollar-based repayment plan, leading to unpredictable monthly payments.
Another customer, after paying for 20 months, found their outstanding loan balance had ballooned unexpectedly, thanks to Mogo’s use of fluctuating foreign exchange rates—despite issuing loans in shillings.
The CAK’s investigation revealed that Mogo had violated sections of the Competition Act by unilaterally altering loan terms and making misleading representations about interest rates.
As a result, the authority directed Mogo to refund Sh344,939 to three customers who had been overcharged due to currency conversion discrepancies and inflated interest rates.
Although Mogo initially denied the accusations, the company ultimately agreed to an administrative settlement. Along with paying the Sh10.9 million fine, Mogo committed to resolving all outstanding complaints and preventing future misconduct.
The company was also instructed to ensure its employees undergo consumer compliance training to avoid a repeat of these issues.
CAK’s directive was clear: “Mogo has been ordered to refrain from misrepresenting facts and engaging in unconscionable conduct when dealing with clients, resolve all pending complaints, and address future complaints promptly.”
The CAK’s ruling against Mogo sends a strong message to financial institutions about the importance of transparency and consumer protection.
In addition to the fine and customer refunds, Mogo must now overhaul its practices to ensure compliance with Kenyan consumer protection laws.
As part of this, Mogo has been mandated to improve its communication with customers and adopt more transparent loan terms.
The company’s employees will receive training to ensure that all future interactions with customers meet regulatory standards. This move comes at a critical time when customer trust in the financial sector hinges on companies’ ability to offer fair, clear, and consistent services.
