The Competition Authority of Kenya has fined the asset finance company Mogo Auto Limited over Ksh 10 million for misleading credit terms after four customers presented cases against it.
In a statement on October 4, the authority ordered the company to pay a penalty of Ksh 10,851,473.20 for violating competition regulations after investigators looked into customer complaints.
“The authority has ordered Mogo to pay a pecuniary penalty of Ksh 10,851,473.20 for violating the Competition Act CAP 504 by engaging in false and misleading representation and unconscionable conduct against its customers.
Additionally, the company was directed to refund three loan customers Ksh 344,939, which is the sum of excess amounts charged in repayment of their loans and the difference in the dollar exchange rate applied during the loan issuance.
However, the first complainant will pay Mogo Ksh 500,000 as the final outstanding loan amount in four equal monthly installments while the second complainant will be refunded Ksh 108,745.1 being the excess amounts charged by Mogo at the time of entering a settlement with the authority.
As for the third and fourth complaint, they will be refunded Ksh 80,915 and Ksh 155, 279, respectively, being the difference between the exchange rate applied during loan application and issuance.
Complaints Raised against Mogo
Investigations into Mogo’s practices came after complaints were lodged with the authority by the company’s four customers on various dates between May 6, 2023, and April 11 2024.
The complaints regarded the currency used in servicing loans that saw customers pay more than they were made to believe.
According to the authority, one complainant stated that in June 2022 they applied for a loan amounting to Ksh 2,100,000, (USD 17,828.16 at the exchange rate of Ksh. 117 to USD 1). It was payable in 60 monthly instalments at a 2.6% flat interest rate.
However, the complainant accused Mogo of changing the terms from flat rate to reducing balance basis, and that the interest payable was calculated in US dollars, despite the facility being disbursed in Kenya shilling. This adjustment, they claimed, caused payment of unpredictable amounts due to foreign exchange fluctuations.
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Another complainant claimed taking a Ksh 300,000 loan in July 2021. After repaying for 20 months, the complainant asked for a statement to the loan in full. The loan statement indicated a balance of Ksh 392,000 and the amount repayable was calculated in US dollars despite being disbursed in Kenya shillings. The complainant settled the loan, but allegedly paid more than contracted.
Other Complaints
The third complainant explained that Mogo financed 50 percent (Ksh 310,000) of the purchase price of a vehicle. The facility was disbursed in Kenya shillings, but the loan agreement captured two currencies Kenya shilling and US dollars.
However, the complainant alleged that Mogo explained that the dollar tabulation was for record-keeping. The firm calculated the loan installment cash in US dollars and required the complainant to pay in Kenya shillings.
In addition, the complainant claimed Mogo did not hand them the loan agreement and introduced a new document called general provisions which was not included during the initial negotiations.
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In another case, a customer took a loan worth Ksh 517,212 in June 2022. They serviced the loan for 7 months after which the balance was indicated as Ksh 726,000. Like the other complainants the loan was disbursed in Kenya shillings but payable in US dollars leading to higher repayments.
The complainant further alleged that Mogo unilaterally varied the interest rate from 2.5 percent (flat rate) to 3.85 percent (reducing balance), which was contrary to the contract terms.
Mogo offers various products across the country including car financing, logbook loans, and loans to bodaboda and tuktuk operators.
The competition authority directed Mogo to refrain from misrepresenting facts and engaging in unconscionable conduct when dealing with its clients, ordering it to conduct consumer compliance training for its staff by August 30, 2025.
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