For the second time in less than 5 months, Opera’s lending platforms are getting the wrong kind of attention. And this time, they are caught up in a “debt-shaming” operation.
In Kenya, borrowers are describing two Opera-backed quick loan apps; OKash and OPesa, as “lenders from hell.” Some are ruing the day they signed up on those platforms.
It has come to light that several Kenyans, who have taken small loans from either of the two platforms recently, have not only been roped into predatory lending but have also been humiliated, embarrassed, and in some cases, threatened.
As the economic fallout of the pandemic shrinks finances and cripples livelihoods, both OPesa and OKash appear to be employing unwholesome practices to forcefully recover loans from Kenyan users who have been forced to take quick loans to get through the downturn.
With digital lenders barred from blacklisting loan defaulters with Credit Reference Bureaus (CRBs) in Kenya since April, the two lending platforms backed by Chinese-owned, Opera, have resorted to below-the-belt tactics.
Several users of the two mobile lending apps, OKash and OPesa, who delayed or defaulted on their loan repayments are now reporting that both platforms are taking the liberty to invade their privacy and reach out to people in their contacts list in a bid to recover the funds. This is after they must have sent countless subtly-threatening messages to the users demanding repayment.
According to many aggrieved users, both apps are now going as far as putting calls and messages through to their friends and family in a manner that is not that far off from harassment.
In such calls and texts, both OPesa and OKash tell the usually totally oblivious friends and family members of the user who has defaulted on a loan to ask the said user to make the repayment.
One user who spoke to WeeTracker on condition of anonymity revealed that OKash had, indeed, recently called up his girlfriend, asking her to tell him to make a repayment of KES 16 K on a loan of KES 8 K that he had taken two months before, even though OKash actually disbursed less than KES 8 K to him originally.
Another lady who claims she has never used any loan app says she was surprised and furious when she received a text recently in which OPesa asked that she told her daughter’s kindergarten teacher to pay her loan of KES 1.2 K.
“I wondered how they got my number and why they chose to send me a text. Do they have to expose that much! Not right at all,” she lamented.
Besides the matter of breaking Kenyan laws by using sensitive user data to reach out to contacts of users without permission, both OPesa and OKash also appear to be choking and milking users through obscenely high-interest rates and outrageous late repayment fees.
One user sent this message to the Central Bank of Kenya (CBK) on 30th May via Twitter:
“I applied for a loan of KES 10 K on 17th March from OKash and I received KES 7,619. I have not paid the loan after l lost my job. Now the penalty fee is KES 5,914. The total figure is KES. 15,354. They are calling me day and night.”
For a platform that claims to be in compliance with Google’s up-to-date policy for Android lending apps, which prohibits apps that promote personal loans that require repayment in full in 60 days or less from the date the loan is issued, it’s clear that someone is doing some two-timing. Plus the above complaint points to a repayment that is over two times what was actually disbursed to the user.
Indeed, many users are facing the same problem where they suddenly find themselves needing to pay back more than two times what they borrowed because of the significant fees that come with late repayment — fees which many have described as greedy and insensitive.
In an emailed response to queries, Peter Kaiga, Acting Director at OKash and OPesa, told WeeTracker that the terms and conditions of the app clearly state that when users initially register with OKash, they have to provide the service with contact information of a referee.
“The referee will only be contacted if a borrower becomes unreachable and the company is unable to collect the debt. The same terms and conditions apply for OPesa,” he said.
“That being said, OKash and OPesa want to make clear that we do not contact people from a borrower’s contact list, this is a false and misleading accusation. It’s important to clarify that OKash and OPesa are fully compliant with all the relevant laws and regulations in Kenya, including the Data Protection Bill of 2019, ICT regulations and CBK Charter,” Kaiga added.
But despite these claims, users continue to complain of blatant invasion of their privacy.
In January, a report put out by American forensic financial research firm, Hindenburg Research, laid out some shocking revelations of flagrant violations and underhanded exchanges in the lending practices adopted by OPay/OKash (Nigeria), OKash/OPesa (Kenya), and CashBean (India). Opera operates its lending business through these four Android apps.
The American firm tested Opera’s lending apps between December 2019 and January 2020 and found that all four of its apps were in “black and white violation” of standard policies guiding loan duration and repayment plans. All the lending apps were found to be engaging in predatory practices and Shylock-like credit offerings
Although Opera denied these allegations, the body of evidence laid out in the report was hard to ignore and the jury has since been out on them, sort of.
Now, it seems Opera’s OPesa and OKash are at again in Kenya — a country where the proliferation of digital lending and the accompanying ills have become a cause for concern, even for the authorities.
In April, the Central Bank of Kenya (CBK) barred unregulated digital mobile lenders from forwarding the names of loan defaulters to CRBs and stopped the blacklisting of borrowers owing less than KES 1 K.
Patrick Njoroge, Governor of the CBK, announced that the suspension of CRB listing for loans that were defaulted from April 1 and the relief from blacklisting would last for six months.
The CBK said delinking unregulated digital mobile lenders from CRBs was as a result of the public outcry over widespread misuse of the credit information sharing (CIS) mechanism.
In Kenya where there are up to 49 digital lenders, more than 3.2 million Kenyans have been negatively listed as loan defaulters in an economy where job cuts and shrinking wages have left thousands of people in a debt trap.
Data from the CRBs show that the accounts negatively listed had jumped from 2.7 million last year, a significant number of them linked to mobile digital borrowers of less than KES 1 K.
As mobile money and digital apps have become an important part of the financial system in Kenya, households and owners of small-and-medium-sized businesses (SMEs) have taken advantage of their mobile phones to access quick loans, mostly without adequate information on the cost of the facilities.
In any case, the uptake of instant credit has continued to soar in Kenya. Informal credit adoption increased to 59 percent in 2019 from a low of 19.2 percent in 2013 largely due to the spread of digital loan apps.
Formal credit also rose to 22.7 percent from 13.2 percent in the same period and this uptick can be attributed to the emergence of mobile banking loan platforms like M-Shwari (NCBA), KCB M-Pesa (KCB) and Eazzy loan (Equity Bank).
The Digital Lenders Association of Kenya (DLAK) — which represents 17 major digital lenders in the country — had on Monday, June 9, distanced itself from the two online credit operators over the debt-shaming of borrowers who default on loan repayment.
In a scathing statement, DLAK said “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 a portion of the statement from DLAK.
“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 was formed early last year by digital lenders and it claims to exist as a body that keeps Kenyan digital lenders in check for the benefit of customers and to ensure fair practices. Its members include Tala, Alternative Circle, Stawika Capital, Zenka Finance, MyCredit, Okolea, LPesa, Kopacent, and Four Kings Investment, among others.
The Association was birthed at a time when digital lending was attracting so much vitriol in Kenya due to predatory practices, shady terms, and crude loan recovery methods attributed to many lending platforms. And evidently, these problems still linger.
Among the resolutions adopted during the formation of the Association 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.
It is this very resolution that both OPesa and OKash now appear to be violating at will.
Update: This post has been updated with comments from an official at OKash.
Featured Image Courtesy: TechpointAfrica
Get Access to 20+ well researched and insightful African business stories monthly & unlimited access to Free-reads.
If you are a Corporate or a Student, please reach out to us at [email protected]