The Competition Authority of Kenya (CAK) has imposed a penalty of Ksh.10.9 million on asset financier Mogo for engaging in misleading practices and exploiting customers through improper loan terms. The penalty follows an investigation triggered by customer complaints filed between May 6, 2023, and April 11, 2024. CAK also ordered Mogo to refund three customers a total of Ksh.344,939, which represents excess charges and discrepancies in the exchange rate applied to their loans.
The complaints highlighted how Mogo, a company specializing in car financing and logbook loans, altered agreed-upon terms and introduced charges that resulted in customers paying more than expected. The first complaint was filed by a customer who took a Ksh.2,100,000 loan in June 2022. The facility, initially set at a flat 2.6% monthly interest rate in shillings, was later switched to a reducing balance basis, causing the payable amount to fluctuate with the dollar exchange rate. The customer claimed this adjustment made it difficult to predict the monthly repayments.
The second complainant took out a Ksh.300,000 loan in July 2021 and discovered that, after 20 months of payment, the outstanding balance had increased to Ksh.392,000. This happened despite the original agreement being in shillings, as Mogo recalculated the balance using USD rates. This customer ended up paying more than the agreed amount to settle the loan.
Similarly, the third complainant borrowed Ksh.310,000 to buy a vehicle. While the loan agreement mentioned both shillings and USD, Mogo insisted that the USD was for record-keeping purposes. However, the company calculated the installment payments in dollars, leading to unexpected costs for the borrower.
The fourth complaint involved a Ksh.517,212 loan issued in June 2022. After making payments for seven months, the borrower was informed that the outstanding balance had ballooned to Ksh.726,000. The complainant accused Mogo of unilaterally increasing the interest rate from 2.5% to 3.85%, again basing repayments on USD instead of the shilling-denominated facility they had initially agreed upon.
After reviewing the evidence provided by the complainants and Mogo’s response, the CAK determined that the company had breached the Competition Act by engaging in false or misleading practices and unconscionable conduct. Mogo agreed to settle the matter with the CAK and pay the penalty.
In addition to the Ksh.10.9 million fine, Mogo was instructed to compensate each of the complainants. The first complainant will receive Ksh.500,000, while the second will be refunded Ksh.108,745. The third and fourth complainants are set to receive Ksh.80,915 and Ksh.155,279, respectively, to address the inconsistencies in exchange rates and interest charges.
The CAK has directed Mogo to amicably resolve all outstanding complaints and ensure that any future issues are addressed promptly. The company must also undergo consumer compliance training by August 30, 2025, to prevent similar incidents in the future.