Asset financier Mogo Auto limited has been ordered to pay a penalty of KSh10.9 million by the Competition Authority of Kenya (CAK) for engaging in false and misleading representation and unconscionable conduct against its customers.
- A further KSh 344,939 is to be refunded to three loan customers resulting from excess amounts charged in repayment of their loans, and the difference in the dollar exchange rate applied during the loan issuance.
What really transpired
Between 6th May 2023 and 11th April 2024, four individual customers from Mogo sent complaints to CAK involving loan overstatement following adjustments in currency from Kenyan shilling to the US dollar during disbursement and repayment.
The first complainant claimed that due to foreign exchange fluctuations, the amount payable to Mogo multiplied to unpredictable amounts. “The complainant accused Mogo of adjusting the terms flat rate to the reducing balance basis, and that the interest payable was calculated in USD, despite the facility being disbursed in KES,” CAK said in a statement.
The second complainant took a KSh300,000 loan in July 2021 and consequently repaid for 20 months. However, when the complainant asked for a statement, they were slapped with KSh392,000 balance and the amount computed in US dollars despite being disbursed in Kenya shillings.
In the third case, Mogo financed 50% of the purchase price of a motor vehicle – KSh 310,000 – disbursed in Kenyan shilling. Contrastingly, the loan agreement, which was withheld during initial negotiations, captured two currencies – the shilling and the US dollar – which Mogo said the dollar tabulation was for “record-keeping purposes”. Mogo later defied the loan agreement and went ahead to calculate the loan installments in US dollars and required the complainant to pay in Kenyan Shillings.
The fourth complainant took a KSh517,212 loan with Mogo in 2022 and consequently serviced the loan for 7 months upon which their repayment balance was KSh726,000. Similar to all the other cases, the loan was disbursed in Kenyan shillings but payable in US dollars. Mogo allegedly varied the interest rate from 2.5% (flat rate) to 3.85% (reducing balance), contrary to the contract terms.
CAK launched investigations which Mogo conformed to and provided relevant evidentiary information. The Authority later determined that Mogo had actually engaged in unconscionable conduct in the four complaints and consequently agreed to settle.
“Upon analyzing the evidentiary information from the complainants and the accused, the Authority concluded that Mogo had violated the Act, specifically clauses prohibiting false or misleading representations, and engaging in unconscionable conduct during issuance and administration of loan products to the complainants,” CAK noted.
The financial services provider was later ordered to pay a KSh10.9 million penalty. An additional KSh108,745 to the 2nd complainant being the excess amounts charged by Mogo at the time of settlement.
The 3rd and 4th complainants to be refunded KSh80,915 and KSh155,279 respectively as the difference between the exchange rate applied against what was applied at issuance of the loan.
The 1st complainant was ordered to pay KSh500,000 as the final outstanding loan amount, payable in four equal monthly installments, lower than the earlier overstated dollar amount.
Mogo was urged to resolve all the pending complaints before the Authority and resolve any future complaint within the stipulated timelines and “refrain from engaging in such conduct in future”. Mogo and its employees will undergo consumer compliance training by 30th August 2025.
Mogo was incorporated in Kenya in 2012 with products ranging from car financing, logbook loans and offering loans to bodaboda and tuktuk operators. Mogo forms part of the Elving Group – an international FinTech company operating in 15 countries across Europe, Asia and Africa.
