MOGO Capital is currently under intense scrutiny in Kenya due to its contentious lending practices, which many claim target vulnerable individuals with difficult-to-understand loan terms and hidden fees.
This criticism is not new, as MOGO has faced accusations for years regarding predatory lending behaviors.
In recent developments, the company was fined KSh 10.9 million by the Competition Authority of Kenya (CAK) after customers complained of misleading loan terms and inflated fees due to currency fluctuations.
MOGO’s recent decision to discontinue dollar-denominated loans in Kenya follows a settlement with CAK, aimed at addressing some of these grievances.
Among the stories fueling public outrage is the account of a Kenyan woman who lost her vehicle her sole income source after she fell behind on payments.
Her financial troubles stemmed from personal hardships, including family emergencies, which temporarily disrupted her ability to make payments.
Rather than offer flexibility, MOGO reportedly enforced severe penalties and repossessed her vehicle, leading to significant backlash and calls for stricter regulatory oversight of such lenders.
Critics argue that MOGO’s business model involves aggressively pursuing vehicle repossessions, even for minor infractions or delayed payments, essentially treating borrowers as collateral.
This approach is compounded by alleged high interest rates and stringent terms that make it challenging for borrowers to clear their debts.
Despite the settlement, public sentiment remains highly critical, with activists urging authorities to enforce stricter lending regulations to curb such practices and protect consumers.
This spotlight on MOGO highlights broader concerns over consumer protection within Kenya’s financial services sector, which some argue favors lenders over borrowers, leaving many Kenyans vulnerable to financial exploitation.
For those considering vehicle-backed loans, especially in Kenya, consumer advocates are advising extreme caution and a thorough review of loan agreements to avoid falling into cycles of debt that can lead to significant financial loss.
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