The Competition Authority of Kenya (CAK) has penalized asset financier Mogo Auto Limited (Mogo) with a fine of Ksh10,851,473.

In a statement on Friday, October 4, 2024, CAK said it fined the asset financier for violating the Competition Act CAP 504.

“The Competition Authority of Kenya has ordered asset financier Mogo Auto Limited to pay a penalty of KES. 10,851,473.20 for violating the Competition Act by engaging in false and misleading representation and unconscionable conduct against its customers,” CAK said.

Mogo, a part of the Eleving Group, operates across three continents and provides services such as car financing, logbook loans, and loans for bodaboda and tuk-tuk operators in Kenya.

CAK said their investigations revealed that the company issued loans in Kenyan Shillings (KES) but structured repayments in U.S. Dollars (USD), leading to unexpected higher payments for clients due to currency fluctuations.

Complaints leading to Investigation

The CAK’s investigation was triggered by complaints from four customers lodged between May 2023 and April 2024.

The authority noted that the customers claimed that Mogo changed the terms of their loans without consent, converting interest calculations from a flat rate to a reducing balance and charging them unpredictable amounts due to the use of USD in repayments.

CAK’s penalties and directives

In addition to the Ksh10.85 million fine, CAK ordered Mogo to refund Ksh344,939 to three of the complainants for excess amounts charged due to exchange rate discrepancies.

The Authority also directed Mogo to provide consumer compliance training to its employees by August 2025 to avoid further violations.

“In addition to the aforementioned penalty, Mogo has been directed to refund three loan customers KES. 344,939, being the sum of excess amounts charged in repayment of their facilities, and the difference in the dollar exchange rate applied during issuance,” CAK said.

Adding that; “Mogo has also been directed to; refrain from misrepresenting facts and engaging in unconscionable conduct when dealing with its clients, amicably resolve all pending complaints before the Authority, and resolve future complaints expeditiously.”

Mogo’s response

In a public statement on October 4, 2024, Mogo expressed its willingness to settle the matter with CAK but emphasized that the settlement was a gesture of goodwill rather than an admission of wrongdoing.

“In reference to the settlement we have entered into with the Competition Authority of Kenya, Mogo was guided by our values that the welfare of the customer is paramount. Dollar-denominated loans was one of the products Mogo was offering to our customers,” Mogo said.

The company explained that less than 15% of its customers had opted for USD-denominated loans, which, while legal, exposed borrowers to currency risks.

“The product had a lower interest rate as compared to Kenyan Shilling denominated loans. Less than 15% of all Mogo customers by free choice had taken dollar-denominated loan.”

Mogo further explained that the product had lower interest rates compared to Kenyan Shilling-denominated loans, but currency fluctuations had resulted in higher repayments for affected customers.

“Unfortunately, due to currency fluctuations, loan repayment amount for part of such customers increased. When complaints were raised through CAK, Mogo decided to enter into a settlement agreement with the CAK and the complainants,” the statement said.

The financier emphasized that its decision to stop offering USD loans was voluntary, noting that the settlement agreement does not imply illegal conduct:

“It is important to note that the settlement agreement means a goodwill settlement by Mogo rather than Mogo being fined for wrong behaviour due to dollar-denominated loans being fully legal as per regulatory framework to which Mogo adheres in Kenya.

“Mogo has also made a decision to stop issuing new dollar-denominated loans in Kenya since May 2024.”