Kenya Insights

Tag: mobile loans

  • Mobile Loans Lender Whitepath Punished With Authority For Harassing Customers

    Mobile Loans Lender Whitepath Punished With Authority For Harassing Customers

    The Office of the Data Protection Commissioner (ODPC) has issued two penalty notices against Whitepath company limited and Regus Kenya for contravening data protection laws.

    The companies will now be required to pay a fine of Sh5 million each.

    For White Path, the penalty has been issued because the firm failed to comply with an ODPC’s enforcement notice dated January 10, 2023.

    In a statement, the ODPC noted that it has received close to 150 complaints against Whitepath alleging that their applications have accessed their mobile phone contacts and are sending unwarranted and unsolicited text messages to the said contacts.

    “Additionally, the Whitepath staff have been harassing the complainants, and their contacts irregularly obtained from the complainant’s phone books,” the statement read.

    The penalty on Regus Kenya is on basis of the firm being non-cooperative and failing to respond to a Notification of Complaint dated October 27, 2022, a reminder to the Notification of Complaint dated November 11, 2022, and an Enforcement Notice dated  February 16, 2023.

    The ODPC noted that the complaint against Regus alleged frequent spamming of automated improper information to the complainant despite attempts to make the respondent stop.

    Speaking on the notices, the Data Commissioner Immaculate Kassait, MBS said, “Data protection is the responsibility of every data controller and processor and it must be the company’s top priority whenever they collect, process, or store personal information.”

    “I challenge businesses to protect personal data by design and by default and cooperate with the ODPC to avoid penalties,” she said.

    The ODPC has also issued an enforcement notice to Ecological Industries Limited due to non-cooperation with several notifications of a complaint launched on January 25, 2023 and a reminder on February 15, 2023 against them for publishing of a personal photo on a company catalog and calendar for marketing purposes.

    “Failure to comply with the enforcement notice within the stipulated time, Ecological Industries Limited will be faced with a penalty notice,” the ODPC said.

    According to Section 72 of the Data Protection Act of 2019, a data controller who, without lawful excuse, discloses personal data in any manner that is incompatible with the purpose for which such data has been collected commits an offence. Additionally, a data processor who, without lawful excuse, discloses personal data processed by the data processor without the prior authority of the data controller commits an offence.

    In 2021, the Office of the Data Protection Commissioner began investigations into a number of digital lenders for sharing borrowers’ confidential data in pursuit of loan defaulters.

    Further, in March 2022, the Central Bank of Kenya banned digital credit providers, its officers, or agents in the course of debt collection, from using obscene or profane language with the customer or the customers’ contacts for purposes of shaming them.

    The complaints about Whitepath are so severe that a local newspaper reported how the firm went as far as forming a WhatsApp group for a client and faking suicide threats to his contacts.

    There are numerous complaints from a number of consumers from Whitepath, including a petition generated by Ms Caroline Kahiu seeking to ban the app over what she termed severe harassment and debt shaming by its employees.

    The complaints against Whitepath point to a growing concern among the public over the debt collection harassment by loan app companies. Customers have reported being harassed by uncouth loan company agents who call them and their contacts incessantly in a bid to force them to pay loans.

    Due to the growing concern, Google announced last week said it would from May 31 prohibit loan apps from accessing user contacts, external storage, images, videos, contacts, the exact location, and call records.

    Whitepath Company is alleged to be operating several apps namely Skypesa, Instacarsh, Kubwa cash Fastcash, Mcredit, papcash, Zuri Cash, and many others.

    So far, only 22 digital lenders have been licensed with WhitePath missing from the list.

  • Google Has Suspended Hundreds Of Unlicensed Loan Apps In Kenya

    Google Has Suspended Hundreds Of Unlicensed Loan Apps In Kenya

    Alphabet-owned Google has suspended hundreds of loan apps in Kenya providing unsecured personal or business loans. The apps had been taken down after failing to comply with Google’s new policy requiring digital lenders to submit proof of licence, according to a TechCrunch report.

    It is unclear how many apps have been booted out but expert estimates suggest that the ballpark figure could be around 500 with popular apps like MoKash and Okash receiving the axe. Up until last month, over 600 apps were active on the Play Store but that number has come down to under 200 as of Friday (March 24).

    After Kenya’s central bank issued regulations for Digital Credit Providers (DCPs) last year, the US-based tech giant also published its new policy in January, requiring credit-providing applications to obtain licences from the top bank.

    According to reports, only 22 digital creditors such as Tala, Pezesha and Jumo had managed to get the licence from the Central Bank of Kenya (CBK) till January.

    The regulations state that any digital lender that is yet to get a licence from CBK can receive an interim approval for Google which is only valid for 45 days. Once the period lapses, the company should either have received the approval or file a declaration that its permit was still pending.

    However, if the company failed to do so, its interim approval will be rescinded and it will be removed from the app store.

    The unregulated loan app business has been booming across most countries. However, the exorbitant interest rates and predatory practices employed by the companies to exact the loan amount has tarnished the reputation of the particular digital sector.

    The situation has become so dire that the Central Bank of Kenya issued a warning to mobile loan providers in 2019, urging them to cap their interest rates and refrain from using aggressive debt collection tactics. However, the warnings seem to have fallen on deaf ears, as many loan providers continued with their predatory practices.

    This is where Google’s action comes in. In a statement, the tech giant announced that it had removed several loan apps from the Google Play Store for violating its policies on loan repayment terms and debt collection practices. Google stated that the loan apps in question had been found to be taking advantage of vulnerable borrowers, engaging in misleading and exploitative lending practices, and using aggressive debt collection tactics.

    This move by Google is commendable and is likely to have a significant impact on the Kenyan mobile loan industry. Without access to the Google Play Store, loan providers will find it difficult to reach new borrowers, and those who have already downloaded the apps will not receive updates or security patches. This means that borrowers who use these loan apps are likely to be exposed to security risks, such as identity theft, and will have no recourse if their data is compromised.

    In conclusion, Google’s suspension of several mobile loan apps in Kenya is a step in the right direction towards addressing the problem of predatory lending practices in the country. However, more needs to be done to protect vulnerable borrowers from these exploitative practices. The Kenyan government and regulators need to work together to ensure that loan providers are held accountable for their actions and that borrowers are protected from abusive lending practices.