Mobile Lenders Under Investigation For ‘Debt Shaming’ Borrowers To Friends and Family

Several mobile lenders are under investigation from the Kenya data regulator for unscrupulous practices they employ in a bid to recover their money.

For many months, Kenyans have complained that certain lenders threaten to ‘debt shame’ them to their contacts, with some of these threats translating into action.

This practice of sharing defaulter data, which should be confidential, has attracted the attention of the agency, and Commissioner Immaculate Kassait has promised to crack down.

Two of the most notorious lenders in this regards are Okash and Opesa, owned by Chinese internet browser giant Opera.

Both lenders have been disowned by the Digital Lenders Association of Kenya (DLAK), which accused them of invading customers’ privacy.

Once you download their app, you grant them permission to access your contact list, and it is this information they use to blackmail you into paying.

“Not only does this behavior go against Kenyan data protection laws, but it reeks of indignity. By reaching out to a customer’s contact list, Opesa and Okash rob the individual of basic dignity and consumer rights,” a statement from DLAK in 2020 read.

Such behavior is a violation of the Data Protection Act, which bars sharing of private date with third parties without consent.

“The Office received complaints from data subjects regarding digital money lending applications. Towards this end, my office has commenced investigations on a total of 67 such complaints in line with the office mandate,” Ms Kassait said on this latest investigation.

Although Ms Kassait did not divulge the identity of the lenders being targeted, it is understood that the Opera-linked apps are still using similar tactics; either contacting contacts, or threatening to do so.

This is on top of the extremely high interest rates, which when annualized can end up to over 500%.

However, even if found guilty, offenders can only be fined Sh5 million or 1% of their annual turnover (whichever is lower). For big lenders, that is a mere slap on the wrist, with little incentive to stop the practice, especially if they end up netting more from it.

“Infringement of provisions of the Kenya Data Protection Act (DPA) will attract a penalty of not more than Sh5 million or, in the case of an undertaking, not more than 1 percent of its annual turnover of the preceding financial year, whichever is lower,” the Act states.

source https://nairobiwire.com/2021/11/mobile-lenders-under-investigation-for-debt-shaming-borrowers-to-friends-and-family.html