For years, digital lenders have operated in Kenya with a disturbing level of impunity, but the recent ruling by the Small Claims Court against MOGO has finally pulled back the curtain on their exploitative operations.
The court declared MOGO’s loan of KSh 400,000, which ballooned to a staggering KSh 976,750, illegal. This is not just a case of high interest; it is a clear testament to the calculated and oppressive tactics employed by MOGO to trap borrowers in a cycle of unending debt.
The borrower had taken a loan of KSh 400,000 and had already repaid KSh 299,369. In a just system, this would have significantly reduced the debt.
However, MOGO, in what can only be described as a brazen act of financial thievery, claimed he still owed KSh 677,381.
This means the company demanded a total repayment of KSh 976,750 to redeem the loan.
This is not a mistake or a miscalculation; it is a systematic attempt to extort more than double the original amount from a borrower who had already made significant repayments.
Their operations are designed not to provide financial relief but to create a permanent revenue stream from unsuspecting Kenyans.
The court’s findings expose the very core of MOGO’s illegal operations. It was established that MOGO’s effective interest rate stands at about a shocking 86.4%.
This figure, combined with a host of dubious additional charges, was rightly described by the court as exploitative and oppressive.
MOGO could not justify how these penalties, monitoring fees, and insurance fees were calculated, revealing that these charges are likely fabricated to inflate the debt artificially.
This lack of transparency is a hallmark of their operations, and it is how they operate with such impunity.
Thankfully, the court applied the in duplum rule, a legal principle that protects borrowers from predatory lending by stipulating that interest cannot exceed the principal amount advanced.
This ruling is a direct blow to MOGO’s business model, which relies on charging interest that far exceeds the principal. By rejecting MOGO’s inflated claim and entering judgment for only KSh 100,631, the court has essentially declared that MOGO’s entire method of calculating debt is illegal and fraudulent.
This judgment against MOGO should serve as a warning to all digital lenders who believe they are above the law. For years, they have been fleecing Kenyans with impunity, hiding behind complex terms and conditions.
The court has now affirmed that such exploitative practices will not be tolerated. It is a victory for the ordinary citizen against a corporate entity that has been operating with the sole purpose of extracting as much money as possible from its borrowers, using illegal and oppressive means.
MOGO must be held accountable, and this ruling is just the beginning.
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