COVID-19 Forces Popular Digital Lenders to go Dirty on Defaulters

Mobile money lenders have been a strong refuge to Kenyans who have been adversely affected by the novel COVID-19 pandemic. Some went ahead to extend the repayment period for borrowed loans and expanded loan limits to give room for more borrowers. Following a directive by the government to extend loans to those blacklisted by the Credit Reference Bureau, a majority agreed on the intervention, but borrowers had to pay a high price to access loans

Now borrowers have to wait longer before their loans could be approved and the rate of rejection is equally high. Some have gone back to their old dirty ways to get these borrowers to repay the loans amid COVID-19. Two digital lenders have been put on notice by the Digital Lenders Association of Kenya following a public uproar over their unconventional ways of getting its defaulters to repay their loans.

The association noted that it had received many complain from the public about two popular mobile money operators namely Okash and Opesa for infringing the privacy of its borrowers. Reports to the association revealed that such institutions had resorted to shaming their clients, by reaching out to contacts in their phone books to get them to help repay the defaulted loan, a practice that has flawed their reputations.

“We condemn this illegal and morally questionable behaviour and urges Okash and Opesa to cease such practices. On behalf of all members not only does this behaviour 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. This can have long term effects on their psychological well-being and damage relations that may have taken years to build,” said DLAK Chairman Robert Masinde.

Numerous public complains about the misuse of credit information by the unregulated digital and credit-only lenders saw the Central Bank withdraw recently withdraw them from its list of subscribers allowed to submit credit information on their borrowers to CRBs.