Google cracks down on illegal loan apps in Kenya, Nigeria

It’s Google demanding loan applications in Kenya to provide proof of license to operate in the country or risk being removed from the Play Store, its digital distribution service. Those who have applied for licensing from the Central Bank of Kenya and can produce evidence of the same may also be spared.

However, Google’s actions were slow, coming two months after Digital Credit Providers Regulations came into force to protect borrowers from fraudulent applications, many of which had predatory lending practices and used debt fraud tactics to get their money back.

New and old loan applications in Kenya are now pending Sending the necessary documents and information or risk being blocked at the end of January next year following similar actions in India, Indonesia and the Philippines.

“Developers with personal loan apps targeting consumers in Kenya need to fill [a] declaration form and submit the necessary documentation before publishing their 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 a policy update , which also requires apps in Nigeria to obtain a “verified letter of approval” from the Federal Competition and Consumer Commission (FCCPC).

Although less stringent than Kenya’s new law, the FCCPC rules, which came into effect in August this year to protect borrowers, expect lending apps 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 the proliferation of loan apps offering quick unsecured personal loans of up to $500. However, the lack of strict regulations and the quick verification process of the Google Play Store has attracted fraudulent operators, forcing the authorities to take appropriate measures to protect citizens.

in Kenya, only 10 of the 288 loan applications that applied for licenses from the country’s Central Bank were approved. Some of the popular ones, like Zenka and Silicon Valley-backed Tala, have yet to be licensed.

Digital lenders in Kenya are expected to avoid using threats or acts of debt fraud, including posting personal information on online forums, making unauthorized calls and messages to customers and accessing their contact lists for the purpose of contacting them in the event of default .

Lending apps collect borrowers’ phone data, including contacts, and request access to messages to check mobile money transaction history — for credit scores and as loan repayment terms. Unfair lenders share some of the collected contact information with third-party debt collectors.

already 40 loan applications in Kenya are under investigation by the Office of the Data Protection Commissioner for a data breach, following complaints from users.

The new law requires lending apps to also disclose their pricing model, terms and conditions to users in advance, unlike in the past when they were not regulated.

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

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