Digital lender, Credit Watch Investment Ltd., will have to pay KSh 300,000 each to Peter Mbugua, Timothy Ngome, and Aggrey Timothy for violating their right to privacy.
- •This is after the High Court quashed an appeal by the digital lender, seeking to rule out the decision made by the Office of the Data Protection Commissioner in December last year.
- •Credit Watch, through its loan platform ‘Cloudloan’, was accused of listing the three aggrieved persons as guarantors or emergency contacts of other individuals who had taken a loan with Cloudloan.
- •Credit Watch violated the privacy of the three respondents in its appeal by sending them messages with veiled threats if they did not coerce the mobile loan defaulters to pay up.
“This court then reaches the persuasion that the ODPC cannot be faulted for making an order of compensation to the three respondents who, as admitted by the appellant, suffered distress, as the law allows the ODPC to grant such a remedy,” Justice Omido declared.
The verdict explained that according to the law, data controllers such as loan apps are supposed to collect data directly from individuals and not through third parties. In this case, Credit Watch violated the provision by accessing contacts of the respondents through their borrowers.
“It is instructive from the appellant’s response that it collected the respondent’s personal data from third parties (the borrowers) and did not have any mechanism of ascertaining that the respondents had given their consent for their personal data to be used and the purpose for which the same was used,” the verdict states.
Screenshots of messages sent by Credit Watch to the three respondents indicated that the lender warned the individuals that they would be met with unspecified consequences if their ‘close persons’ who borrowed the loans did not pay up. The appellant had never informed the respondents prior that such an action was to be taken with their data.
The Central Bank of Kenya (CBK) has licensed 85 digital lenders, with dozen applications still pending. These loan apps have grown popular due to the ease of borrowing during emergencies. However, once defaulted, the loans are not easily recoverable and the firms have to rely on extreme measures to coerce repayment. This includes persistently bothering close relations of borrowers through endless calls and threatening messages.