Google clamps down on illegal loan apps in Kenya, Nigeria • TechCrunch

Google requires loan applications in Kenya to provide proof of a license to operate in the country from its main bank, otherwise they risk being removed from the Play Store, its digital distribution service. Those who have requested a license and can present proof of it may also be exempted.

However, Google’s action has been slow, two months after the Regulation of Digital Credit Providers it went into effect to protect borrowers from unauthorized applications, many of whom engaged in predatory lending practices and used debt-shaming tactics to get their money back.

New and old loan applications in Kenya are now expected to submit the necessary documents and information, or risk being blocked at the end of January next year.

“Developers with personal loan applications targeting Kenyan users must complete [a] declaration form and submit the necessary documentation before publishing your personal loan app…Personal loan apps operating in Kenya without proper declaration and license attribution will be removed from the Play Store,” Google said in an update to policy that also requires applications in Nigeria to obtain a “verifiable approval letter” from the Federal Competition and Consumer Protection Commission (FCCPC).

While less stringent than Kenya’s new law, the FCCPC rules, which came into effect in August this year to protect borrowers, expect loan applications to declare their fees and demonstrate how they receive feedback and resolve complaints. , among other requirements.

Kenya and Nigeria are major tech hubs in Africa and have seen a proliferation of loan apps, offering fast, unsecured personal loans of up to $500. However, the lack of strict regulations has attracted rogue operators who require the authorities to take adequate measures to protect citizens.

In Kenya, only 10 of the 288 loan applications that applied for licenses from the country’s Central Bank have been allowed. Some of the most popular, like the Silicon Valley-backed Zenka and Tala, are not yet licensed.

Digital lenders in Kenya are expected to avoid using threats or actions to shame debt, including posting personal information on online forums, unauthorized calls and messages to customers, and accessing their contact lists to communicate with them in case of non-compliance. .

Lending apps collect borrowers’ phone data, including contacts, and require access to messages to verify mobile money transaction history, credit rating, and loan disbursement conditions. Rogue lenders have been sharing some of the collected contact information with third-party debt collectors.

Already, 40 loan applications in Kenya are under investigation by the data protection commissioner’s office for data breaches, following user complaints.

The new law requires loan applications to also disclose their pricing model, terms and conditions to consumers up front, unlike in the past when they were unmonitored.

Apps are also expected to notify the regulator before introducing new products or making changes to existing ones, as well as disclosing and providing evidence of their funding sources.

Leave a Comment