Digital lenders continued to harass defaulters and violate their consumer data rights. This is according to Ajua’s Quarter 1 2021 Customer Loyalty Industry Benchmark Report released recently.
The report, which covered Customer Experience in 12 industries in Kenya revealed that mobile money lenders continue to flout data privacy policies to facilitate debt recovery, going as far as calling people’s contacts and posting about their debts on their customers’ social media profiles. This has been exacerbated by the COVID 19 pandemic which has led to low consumer spending and mass defaulting of loans. As a result, the majority of mobile money lenders have found it difficult to reap commercial benefits.
One customer narrated to Ajua, how one of the lenders even threatened to use their social media account to create a group to raise money for them.
This is against Kenya’s Data Protection laws which were enacted in 2019. These laws are meant to prevent the misuse of personal data, strengthen individuals’ fundamental rights and prescribe penalties to enterprises that violate these consumer data rights.
Ajua Data Protection officer, John Walubengo was a member of the Data Protection Task Force (2018) that set the policies and the bill that later became the Data Protection Act (2019).
“These laws enhance the rights of the consumers allowing them to exercise their rightsto ownership of the personal data that enterprises collect about them. Such rights include but are not limited to the right to consents, right to be forgotten, right to data rectification, right to be informed of data breaches amongst others.” John said.
The risk of infringing on privacy across the board is growing by the day given the increased volume of data being collected by companies and advances in the technology for processing them. Ajua is asking mobile money lenders as well as other industries to be mindful of personal data and educate themselves on data privacy compliance to avoid running into any problems with the law.
Regulating digital lenders
A report from the Center of Financial Inclusion on the state of the digital consumer credit market in Kenya documented the “rapid growth” in mobile lenders and “alarming levels of defaults and delinquency”.
Last year, the Central Bank of Kenya (CBK) announced plans to regulate mobile lending loan rates in a new bill proposed to parliament. It’s part of the Central Bank of Kenya (Amendment) Bill, 2020.
The bill seek to “amend the Central Bank of Kenya Act to regulate the conduct of providers of digital financial products and services.” Through the bill, “the Central Bank of Kenya will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.” Parliament cleared a Bill in March this year.