NAIROBI, Kenya, Digital Lenders Association of Kenya has distanced itself from two online credit operators over debt shaming practices on borrowers who default on loan repayment.
The members in a statement on Monday said that Opesa and Okash are known for invading a customer’s privacy which is against the Kenyan data protection laws and has further tainted the reputation of digital lenders in Kenya.“Not only does this behavior go against Kenyan data protection laws, but it reeks of indignity. By reaching out to a customer’s contact list, Opesa and Okash rob the individual of basic dignity and consumer rights,” reads DLAK statement.
According to DLAK, consumers of mobile app Okash and Opesa who delayed or defaulted on their loan repayments often have the lenders reach out to people in their contacts list in a bid to recover the funds. “This can have long term effects on their psychological well-being and damage relations that may have taken years to build,” said DLAK Chairperson Robert Masinde.
DLAK members include Tala, Alternative Circle, Stawika Capital, Zenka Finance, MyCredit, Okolea, LPesa, Kopacent, Four Kings Investment among others.
The members last year launched a regulatory program which it said was for the benefit of consumers.
Among the resolutions was to ensure that consumers enjoy data privacy where digital lenders collect personal data only relevant to the services provided, and for which the borrower has given express permission.
The announcement comes a time when the digital lenders have for long been accused of charging high interest rates, using crude methods to recover loans, and predatory lending tactics by offering loans to borrowers with no means to pay back.
Several the unregulated microlenders have invested in Kenya’s credit market in response to the growth in demand for quick loans.
In April, Central Bank of Kenya barred unregulated digital mobile lenders from forwarding the names of loan defaulters to credit reference bureaus. The directive also affected members of DLAK who already have a regulatory framework.
Currently, CBK governor Patrick Njoroge announced during post-MPC held last month that the lenders are now engaging with the regulator for a framework aimed at protecting borrowers from mistreatment by the online lenders.
Millions of Kenyans have been listed on Credit Reference Bureaus by the digital mobile lenders for loans as little as Sh500
News Culled from Capitalfm
