The Competition Authority of Kenya (CAK) has imposed a KES 10.85 million fine on asset financier Mogo Auto Limited for violating the Competition Act through misleading representation and unconscionable conduct. Mogo, part of the international FinTech company Eleving Group, operates in Kenya’s automotive financing sector and provides loans for vehicles, including motorcycles and tuk-tuks.
The fine follows an investigation into complaints from customers who accused Mogo of charging them more than their loan agreements stipulated, along with applying unfavorable foreign exchange rates and altering interest calculations. In addition to the fine, Mogo has been directed to reimburse specific customers excess charges totaling KES 344,939.
CAK’s investigation was initiated after four customers lodged complaints against Mogo between May 2023 and April 2024. The complaints centered on loan amounts initially provided in Kenyan shillings but later calculated in U.S. dollars, which exposed customers to currency fluctuations.
One complainant reported receiving a loan of KES 2.1 million, originally set at a flat interest rate of 2.6%, but later found the terms changed to a reducing balance system. This shift increased the total cost of repayment, exacerbated by Mogo calculating repayments in dollars. Similarly, another customer who took a KES 300,000 loan discovered that their outstanding balance had unexpectedly ballooned to KES 392,000, a figure inflated by dollar conversions.
The third customer, who had borrowed KES 310,000 for vehicle financing, claimed that Mogo used dual currency agreements, involving both Kenyan shillings and U.S. dollars, to obscure repayment terms. Meanwhile, the fourth complainant alleged that their loan balance increased significantly from KES 517,212 to KES 726,000 after Mogo unilaterally adjusted interest rates from 2.5% to 3.85%.
Following a detailed investigation, CAK found that Mogo had violated key provisions of the Competition Act, specifically those relating to false or misleading representations and engaging in unconscionable conduct. These actions included failing to properly disclose the basis of foreign exchange conversions and interest rate adjustments, which left customers vulnerable to paying unpredictable amounts.
The Competition Act prohibits businesses from making false or misleading claims regarding the nature, price, or terms of goods or services offered. Additionally, the Act seeks to prevent unconscionable conduct, defined as actions that exploit consumers through unfair practices, such as unanticipated price increases or significant changes to the terms of a contract.
Mogo responded to the allegations through written and oral submissions, expressing willingness to settle the matter with CAK. The settlement process, guided by the Authority’s Consolidated Competition Administrative Remedies and Settlement Guidelines, led to the imposition of the KES 10.85 million fine and specific remedies for the affected customers.
Mogo has been ordered to pay the fine, which represents a portion of the company’s annual turnover, and refund three loan customers a combined total of KES 344,939. The refunds include KES 108,745.10 to the second complainant, KES 80,915 to the third complainant, and KES 155,279 to the fourth complainant. The company is also required to allow the first complainant to settle their remaining loan balance of KES 500,000 in four equal installments.
In addition to these refunds, Mogo has been directed to refrain from engaging in similar conduct and to resolve all future complaints promptly. The company has also agreed to provide consumer compliance training for its employees by August 2025, in line with CAK’s directives.
Mogo Auto Limited, which has been operating in Kenya since 2012, is part of the Eleving Group, an international FinTech company active in 15 countries across Europe, Asia, and Africa. The company’s products include car financing, logbook loans, and loans for bodaboda and tuk-tuk operators.
This ruling by CAK underscores the importance of transparency in Kenya’s financial services sector, particularly in areas such as automotive financing, where borrowers are often exposed to complex loan terms. Mogo’s case is a reminder that businesses must adhere to the legal standards outlined in the Competition Act, ensuring fair treatment for customers and avoiding misleading practices.
The Competition Authority of Kenya plays a critical role in ensuring fair market practices and protecting consumers from exploitative conduct. Its decision to impose a substantial fine on Mogo sends a strong message to businesses about the consequences of breaching consumer rights.
The settlement between CAK and Mogo reflects a broader trend of regulatory authorities across the globe taking a more active role in addressing consumer complaints and holding businesses accountable for misleading or unfair practices.
Do you have any story or press releases you want to share? Send tips to editor@envestreetfinancial.com
Follow us on Twitter, Facebook, or LinkedIn to ensure you don’t miss out on any