By Sam Alfan.
Microlender Mogo Auto ltd is facing a class action suit over alleged predatory lending and loan recovery procedures, which has been termed as unfair.
In a petition before the High Court, three borrowers said Mogo’s loan documentation and disclosure methods are misleading and deceptive.
The borrowers said the company, which finances acquisition of cars and motorbikes fail to properly inform borrowers of the true cost of credit, the effect of foreign-currency indexing, and the real financial obligations undertaken, all of which are uniformly concealed from consumers in violation of basic commercial fairness.
Justice Dr. Freda Mugambi directed the three borrowers- Caroline Nderitu, Wilson Gikonyo and Joseph Wangari to serve the company with the court documents, in readiness for hearing of the case in December.
The three want to be allowed to institute, prosecute, and maintain the intended suit in a representative capacity, on their own behalf and on behalf of all other borrowers.
They argue Mogo’s conduct constitutes a pattern of predatory lending, targeting vulnerable consumers with misleading promises of affordable financing.
However, the borrowers are later subjected to hidden charges, inflated insurance premiums, and repossession threats, all of which amount to an exploitative business model affecting all class members equally.
It is their argument that consumers who obtained motor vehicle or asset financing from Mogo auto Limited, under its standard-form loan agreements and uniform lending model, are subjected to similar loan terms, interest computations, recovery methods, and insurance arrangements.
“The reliefs sought are declaratory, injunctive, and restitution in nature and their determination will apply uniformly to all borrowers who were subjected to the same contract structure and business practices,” the borrowers said.
Through lawyer Simon Mburu, the borrowers want the court to invite other borrowers to join the case in a newspaper advertisement and digital platforms.
“Upon due publication of the said notice and the lapse of the period specified by the Court, all borrowers and consumers of Mogo’s credit facilities who were subjected to the same uniform lending and recovery practices may, as the Court shall direct, be deemed represented in and bound by the outcome of these proceedings,” the trio said.
The borrowers said they each entered into financing agreements that are identical in form, substance, and operation, and their grievances mirror those of thousands of other borrowers across Kenya.
“The Applicants therefore bring this application as proper, willing, and competent representative of all persons who have been subjected to Mugo’s uniform lending and recovery practices, seeking the leave of the court to institute and maintain the intended suit in a representative capacity,” the petition states.
They said the variations in individual loan amounts or repayment periods do not defeat the commonality of interest, as the underlying question concerns the legality and fairness of Mogo’s standardized contractual framework rather than the personal circumstances of each borrower.
They borrowers across have a direct, substantial, and genuine interest in the dispute, having suffered the same treatment.
