Opera landing in loan problems again
For the second time in less than 5 months, Opera’s lending platforms are receiving poor attention. And this time, they are caught in a “debt-shaming” operation.
In Kenya, borrowers describe two rapid loan applications supported by Opera; OKash and OPesa, as “hell lenders”. Some spoil the day they registered on these platforms.
It emerged that several Kenyans, who recently took small loans from either of the two platforms, were not only drawn into predatory lending, but were also humiliated, embarrassed, and in some cases, threatened.
As the economic fallout from the pandemic squeezes finances and cripples livelihoods, OPesa and OKash appear to be using unhealthy practices to forcibly reclaim loans from Kenyan users who have been forced into quick loans to weather the recession.
With digital lenders banned from blacklisting delinquent debtors with credit reference bureaus (CRBs) in Kenya since April, the two lending platforms backed by Opera, owned by the Chinese company, have resorted to recourse to unrealistic tactics.
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Several users of the two mobile loan apps, OKash and OPesa, who have delayed or defaulted on their loan repayments are now reporting that the two platforms are taking the liberty of invading their privacy and contacting people on their list. contacts in order to recover the fund. It was after that they had to send countless subtly threatening messages to users demanding reimbursement.
According to many aggrieved users, both apps now go so far as to forward calls and messages to their friends and family in a way that is not so far removed from harassment.
In such calls and texts, OPesa and OKash tell friends and family members who are generally totally unaware of the user who has defaulted on a loan to ask said user to make the repayment.
A user who spoke to WeeTracker on condition of anonymity revealed that OKash had, in fact, recently called his girlfriend, asking her to tell her to pay off KES 16K on a KES 8K loan he had taken out. two months ago. , although OKash originally paid him less than KES 8.
Another lady who claims to have never used a loan app says she was surprised and furious when she recently received a text message in which OPesa asked her to tell her daughter’s schoolteacher to pay her loan of KES 1.2K.
“I was wondering how they got my number and why they chose to text me. Do they have to exhibit so much! Not good at all, “she lamented.
Besides the issue of breaking Kenyan laws by using sensitive user data to contact user contacts without authorization, OPesa and OKash also appear to choke and milk users through obscene interest rates and outrageous late reimbursement fees. .
A user sent this a message to the Central Bank of Kenya (CBK) on May 30 via Twitter:
“I applied for a KES 10K loan on March 17th from OKash and received KES 7,619. I did not pay the loan after I lost my job. Now the penalty fee is KES 5,914. The total figure is KES. 15 354. They call me day and night.
For a platform that claims to be compliant with Google’s updated policy for Android loan apps, which bans apps that promote personal loans that require full repayment within 60 days or less from the date issuance of the loan, it is clear that someone is doing double. Additionally, the above complaint indicates a refund that is more than double what was actually paid to the user.
Indeed, many users face the same problem where they suddenly find themselves forced to repay more than twice what they have borrowed due to the large fees that come with late repayments – fees that many have described as greedy and insensitive. .
In an email response to the questions, Peter Kaiga, Acting Director at OKash and OPesa, told WeeTracker that the terms and conditions of the app make it clear that when users initially register with OKash, they must provide the service the contact details of an arbitrator.
“The arbitrator will only be contacted if a borrower becomes unreachable and the company is unable to collect the debt. The same terms and conditions apply to OPesa, ”he said.
“That being said, OKash and OPesa want to clarify that we are not contacting people on a borrower’s contact list, this is a false and misleading accusation. It is important to clarify that OKash and OPesa are fully compliant with all relevant laws and regulations in Kenya, including the Data Protection Bill 2019, ICT regulations and the CBK Charter, ”Kaiga added.
But despite these claims, users continue to complain of a blatant invasion of their privacy.
Not the first time
In January, a report published by an American forensic financial research firm, Hindenburg Research, has made shocking revelations of blatant violations and devious trading in the lending practices adopted by OPay/ OKash (Nigeria), OKash / OPesa (Kenya) and CashBean (India). Opera operates its lending business through these four Android applications.
The U.S. company tested Opera’s loan applications between December 2019 and January 2020 and found that its four applications were in “black and white violation” of standard policies governing loan terms and repayment plans. All loan applications have been found to engage in predatory practices and shylock type credit offers
Although Opera denied the allegations, all of the evidence presented in the report was hard to ignore and the jury has since looked into it, sort of.
Now it looks like Opera’s OPesa and OKash are in Kenya again – a country where the proliferation of digital loans and the evils that accompany it have become a source of concern even to the authorities.
Kenya’s standoff over digital loans
In April, the Central Bank of Kenya (CBK) banned unregulated digital mobile lenders from forwarding the names of delinquent debtors to CRBs and ended the blacklisting of borrowers who owed less than KES 1.
Patrick Njoroge, governor of the CBK, announced that the suspension of the CRB listing for loans in default from April 1 and the reduction of the blacklist would last six months.
The CBK said the dissociation of unregulated digital mobile lenders from CRBs was the result of public outcry over the widespread abuse of the Credit Information Sharing Mechanism (CIS).
In Kenya, where there are up to 49 digital lenders, over 3.2 million Kenyans have been negatively listed as loan defaulters in an economy where job cuts and falling wages have left thousands in debt traps.
CRB data shows that negatively rated accounts grew from 2.7 million last year, with a significant number linked to mobile digital borrowers under KES 1K.
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 enterprises (SMEs) have taken advantage of their mobile phones to access fast loans, most without adequate information on the cost of installations.
Regardless, the use of instant credit continued to soar in Kenya. Informal credit adoption increased to 59% in 2019 from a low of 19.2% in 2013, largely due to the spread of digital lending applications.
Formal credit also rose to 22.7% from 13.2% during the same period and this increase can be attributed to the emergence of mobile bank lending platforms like M-Shwari (NCBA), KCB M-Pesa (KCB) and Eazzy Loan (Equity Bank).
Still on the OPesa / OKash folder
The Digital Lenders Association of Kenya (DLAK) – which represents 17 major digital lenders in the country – on Monday, June 9, distanced itself from the two online credit operators on the shame of the debt of defaulting borrowers of their loan.
In a scathing statement, DLAK mentionned “OPesa and OKash are known to have invaded a client’s privacy, which is against Kenyan data protection laws and has further damaged the reputation of digital lenders in Kenya.
“Not only does this behavior violate Kenyan data protection laws, it smacks of outrage. By addressing a client’s contact list, OPesa and OKash are robbing the individual of their basic dignity and consumer rights, ”part of DLAK’s statement read.
“This can have long-term effects on their psychological well-being and damage relationships that may have taken years to build,” said DLAK President Robert Masinde.
DLAK was formed early last year by digital lenders and claims to exist as a body that monitors Kenyan digital lenders for the benefit of clients 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 born at a time when digital lending was attracting so much vitriol to Kenya due to predatory practices, shady terms and crude loan collection methods attributed to many lending platforms. And obviously, these problems persist.
One of the resolutions adopted during the formation of the Association was to ensure that consumers enjoy data privacy when digital lenders collect personal data only relevant to the services provided and for which the borrower has given permission. express.
It is this same resolution that OPesa and OKash now appear to be violating at will.
Update: This post has been updated with comments from an OKash maintainer.
Image courtesy of: TechpointAfrica