Asset Financier Mogo Auto Fined Sh10.8M For False And Misleading Loan Terms

The Competition Authority of Kenya (CAK) has fined Mogo Auto Ksh 10.85 million for misleading customers who secured loans for various assets using the company.

According to the authority, the firm which provides financing options for options for used cars, logbook loans, Boda Boda, and Tuk Tuk loans for Kenyans engaged in false and misleading representation and unconscionable conduct against four customers who lodge a complaint against the firm in regards to terms of their loans.

“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,” says CAK in a statement.

Investigations into complaints lodged by four customers of the asset finance company reveals that the firm adjusted terms of its loans without informing them leading to excess charges.

In the first instance, the firm is accused of adjusting the terms of a Ksh 2.1 million facility payable in 60 monthly installment at a flat interest rate of 2.6pc.

“The complainant accused Mogo of adjusting the terms from flat rate to reducing balance basis, and that the interest payable was calculated in US dollars, despite the facility being disbursed in Kenya shillings. This adjustment, they claimed, caused payment of unpredictable amounts due to foreign exchange fluctuations,” CAK stated.

The second victim had their repayment terms on a Ksh 300,000 facility computed in US dollars despite the loan being taken in Ksh.

“After repaying for twenty (20) months, the complainant requested for a statement with the aim of settling the loan in full. The loan statement indicated a balance of Ksh 392,000. In addition, the amount repayable had been computed in USD despite being disbursed in KES. The complainant settled the loan, but allegedly paid more than contracted,” says the authority.

CAK further says the third complainant asserted that Mogo financed 50pc (Ksh 310,000) of the purchase price of a motor vehicle.  Despite the facility being disbursed in local currency, loan agreement captured two Ksh and US dollars.

“The complainant alleged that Mogo explained that the dollar tabulation was for record-keeping. However, subsequently, Mogo calculated the loan installment amounts in USD and required the complainant to pay in Ksh. Further, the complainant claimed Mogo did not furnish them with the loan agreement and introduced a new document (General Provisions), which was not availed during the initial negotiations.”

The fourth complainant also had their loan repayment terms  on a Ksh 517,212 facility adjusted to US dollar exposing them to higher instalments.

The complainant serviced the loan for seven months after which their facility balance was tabulated as Ksh 726,000. The
complainant further alleged that Mogo unilaterally varied the interest rate from 2.5pc (flat rate) to 3.85pc (reducing balance), contrary to the contract terms.

Following the investigations, the asset finance company is now expected to pay the prescribed penalty to the authority for contravening section 55(b)(i),  sections 56(1) and 56(3) of the Competition Act.

Nonetheless, the first complainant will now pay Mogo Ksh 500,000 as the final outstanding loan amount, payable in four equal monthly installments while the second complainant will be refunded Ksh 108,745.1 being the excess amounts charged
by the firm at the time of entering a settlement with the Authority.

Third complainant and fourth complaint will also be refunded Ksh 80,915 and Ksh 155,279, respectively, being the difference between the exchange rate applied during loan application and issuance.

Additionally, Mogo Auto has been directed to amicably resolve all the pending complaints lodged at the Authority, resolve any future complaint within the stipulated timelines, and refrain from engaging in similar conduct in future.

The firm and its employees are also to undergo consumer compliance training by August 30, 2025.