The Competition Authority of Kenya (CAK) recently fined Mogo Auto Limited KES 10.85 million for misleading representation and engaging in unconscionable conduct towards its customers. This ruling comes after the Authority received several complaints from customers about improper loan practices, including overcharging and unauthorized adjustments to loan terms.
The core of the issue lay in Mogo’s approach to loan issuance and repayment. Despite offering loans in Kenyan Shillings (KES), Mogo calculated repayments in U.S. dollars (USD), which exposed customers to the volatility of exchange rates. One complainant, who borrowed KES 2,100,000, saw their loan repayment recalculated to USD 17,828.16, which fluctuated due to changes in foreign exchange rates.
This led to higher and unpredictable repayments. “I was shocked to see the final loan amount had changed significantly from what I had agreed upon. It made budgeting nearly impossible,” one complainant noted.
Additionally, Mogo Auto was accused of making unilateral changes to interest rates. In some cases, customers were initially offered loans at a flat interest rate, only to have the terms adjusted to a reducing balance rate without their consent.
This violated the contractual agreements and placed additional financial strain on the borrowers. “I trusted the terms we agreed upon, but when they changed the interest rate without my approval, it felt like I was tricked,” another customer lamented.
In response to these complaints, CAK launched an investigation and found Mogo to be in violation of sections 55(b)(i) and 56 of the Competition Act, which prohibit false or misleading representations and unconscionable conduct in loan administration. CAK’s ruling mandated that Mogo refund a total of KES 344,939 to three customers to cover overcharges stemming from currency conversions and interest rate alterations.
“Mogo Auto Limited’s actions contravened the principles of fairness and transparency that should govern loan transactions,” a CAK representative stated. The company has also been ordered to resolve all pending complaints and avoid similar misconduct in the future. To further enhance compliance, Mogo and its employees must undergo consumer protection training by August 2025
