Outcry as mobile lenders use ‘cruel’ tactics to recover loans

May has been a hot month for mobile loan service providers as users question the legality and propriety of lenders informing third parties about cash owed.

“They call your contacts asking them to tell you to pay your loan. Now my question is: What do they hope to gain from these people? They should understand you don’t take loans coz (sic) it’s fun.”

PHONE BOOK

That comment was posted online on May 15 by a miffed user of OKash, one of the more than 80 mobile lenders offering loans to Kenyans through smartphone applications.

She posted the tirade on Google Play Store, the platform where Android users download phone applications and rate the different apps available.

On the Play Store platform, OKash has been on the receiving end this month from a number of Kenyans due to its ways of contacting debtors whose loans are overdue.

It typically sends an SMS to contacts in a debtor’s phone book, asking the to inform him or her (the debtor) about an overdue loan.

As shared by one Facebook user, a typical message from OKash reads: “Kindly inform (name of debtor) of (phone number) to pay the OKASH loan of (amount) TODAY before we proceed and take legal action to retrieve the debt. We have tried calling in vain. This is the last reminder. Many thanks, OKASH team.”

Another unimpressed user posted on May 17: “If you delay paying for a day after talking to their customer care, they still contact all your phone book (contacts) to embarrass you, telling members to inform you to pay a loan you took.”

The Sunday Nation on Friday contacted the OKash customer care department for an explanation on their controversial loan recovery methods.

A representative of OneSpot Technology, the owners of the app, said users should read the terms and conditions and only proceed if they are agreeable to them.

In response to the communication to contacts on a debtor’s phone book, she noted that OKash has recently changed its system to have a place for referees.

“A new provision has been made in that a client needs at least two referees whom you should notify before providing their names,” she said. “If you’re going to install, of course it’s going to ask you to give access to your contacts. If you don’t want, just decline.”

PLAY STORE

The representative, however, terminated the conversation when asked about the lender’s high interest rates.

A related lending app, OPesa, uses a different strategy, and it has also been receiving acerbic critiques on the Play Store. On May 4, a user posted on the platform: “You should stop the threats. How can you be sending someone threats after every hour and the due date is not over yet?”

The app owner, TK Limited, replied with an apology, asking the user to contact them.

In response to another query, TK Limited says it reaches out to people on a person’s contact list when that lender cannot be traced.

A survey by US-based firm Consultative Group to Assist the Poor (CGAP) that was released in October 2018 showed that there were 6.1 million digital borrowers in Kenya, most of them being in the 26-35 age bracket.

The poisoned chalice is the interest rates charged. According to a recent Nation Newsplex analysis, the fees charged on digital loans range from 6 per cent to 10 per cent for a one-month loan.

The loan givers’ strong-arm tactics do not, however, end with the repayment requests. Some lenders have been pushing the envelope in terms of getting new users to download their apps. An outstanding example is the Jaguar Loan App, one of the innovations that appear when one searches for lending apps on the Play Store.

This is an app that was disowned by Starehe MP Charles Njagua Kanyi, alias Jaguar, in April, who warned Kenyans not to be duped into losing their cash through the app.

But as of yesterday, the app was still going strong on Play Store, with a rating of 4.3 out of 5 from 14,907 users. Further, the platform indicates that it has been downloaded more than 100,000 times.