Google cracks down on illegal loan apps in Kenya, Nigeria • TechCrunch
Image sources: Tala
Google requires Kenyan loan apps to provide proof of their license to operate in the country, failing which they will be removed from the Play Store, the digital distribution service. Those who have applied for permission from the Central Bank of Kenya and can show proof can also escape.
But Google is slow to act, two months after the Digital Credit Providers Regulation came into effect to protect borrowers from rogue apps, many of which used predatory lending practices and debt fraud tactics to get their money back.
Kenyan new and old loan applications are expected to submit the required documents and information or risk being disqualified at the end of January next year after similar actions in India, Indonesia and the Philippines.
“Developers with personal loan apps targeting Kenyan users must deliver [a] declaration form and submit the required documents before publishing their personal loan app… Personal loan apps operating in Kenya without proper declaration and license assignment will be removed from the Play Store,” Google said in the policy update, which also requires Nigerian apps to have a “verifiable letter of approval” from the Federal Competition and Consumer Commission (FCCPC).
While less stringent than Kenya’s new law, FCCPC rules that came into force in August this year to protect borrowers require rental apps to disclose their fees and show how they receive feedback and resolve complaints, among other things.
Kenya and Nigeria are major tech hubs in Africa and have witnessed the proliferation of loan apps that offer quick unsecured personal loans of up to $500. However, the lack of strict regulations and the Google Play Store’s simplistic verification process have attracted rogue operators, so the authorities must take appropriate measures to protect citizens.
In Kenya, of the 288 loan applications that applied for approval from the country’s central bank, only 10 were approved. Some popular products, such as Zenka and Silicon Valley-backed Tala, have yet to be licensed.
Digital lenders in Kenya are expected to avoid threats or debt shaming, including posting personal information on online forums, making unauthorized calls and messages to customers, and accessing their contacts to contact them in case of default. .
Lending apps collect borrowers’ phone data, including contacts, and request access to messages to check mobile money transaction history – for credit ratings and as conditions for disbursing loans. Fraudulent lenders shared some of the collected contact information with third-party debt collectors.
already 40 loan applications are being investigated in Kenya the office of the data protection commissioner due to a data protection incident, based on a user complaint.
The new law requires credit applications to disclose their pricing model and conditions to consumers in advance, unlike in the past, when they were unsupervised.
Apps are also expected to notify the regulator before introducing new products or modifying existing ones, in addition to disclosing and providing evidence of their funding sources.