Google will take action against illegal loan apps In Kenya and Nigeria. Those who are unable to provide documentation confirming their authorization to conduct business in Kenya and Nigeria will be removed from Google’s Play Store, the company’s online digital distribution service.
The Central Bank of Kenya says it may spare those individuals who have submitted an application for a licence and can provide evidence of the same.
On the other hand, Google has been slow to act. In order to protect borrowers from rogue apps, the Digital Credit Providers Regulations went into effect two months ago. These rogue apps used predatory lending practices and debt-shaming tactics to recover their customers’ money. Following the implementation of these regulations, Google took action.
New and existing loan applications in Kenya are now expected to submit the necessary documentation and information by the end of January 2019, failing which they risk being shut out of the system. This measure is analogous to those taken in India, Indonesia, and the Philippines.
“Developers with personal loan apps targeting Kenyan users must complete [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,” said Google in a policy update that also necessitates apps in Nigeria to get a “verifiable approval letter” from the Federal Competition and Consumer Protection Commission (FCCPC).
The FCCPC rules, which came into effect in August of this year to protect borrowers, expect lending apps to declare their fees and demonstrate how they receive feedback and solve complaints, among other requirements. This is a less stringent requirement than Kenya’s new law, but it is still a requirement.
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Justifying Google’s Action
There has been a boom of lending apps in Kenya and Nigeria, both of which are important digital hubs in Africa. These applications offer fast unsecured personal loans of up to $500, and the maximum loan amount is $500. However, due to the lack of severe laws and the slapdash vetting procedure of Google Play Store, rogue operators have been drawn to the platform. As a result, the authorities have been forced to take appropriate measures to protect the public.
Only ten out of the 288 different loan applications that were submitted to the Central Bank of Kenya for approval were granted permission to move further. Some of the most well-known ones, such as Zenka and Tala, which are supported by Silicon Valley, have not yet been granted licences.
It is expected of Kenya’s digital lenders that they will not use threats or engage in debt-shaming practices of any kind. This includes posting personal information on online forums, sending unauthorised calls and messages to customers, and accessing customers’ contact lists to get in touch with them if they default on their loans.
For the sake of credit scoring and disbursing loans, loan applications collect borrowers’ phone data, including contacts, and seek access to messages in order to check the history of mobile money transactions. Unsavoury lenders have been known to give some of the contact information they have acquired to debt collectors who work for third parties.
Records on Data Insecurity in Kenya that could Back Google’s Verdict
After receiving customer complaints, the Office of the Data Protection Commissioner in Kenya is looking into forty different loan applications in Kenya for possible data breaches.
Unlike in the past, when loan apps were not supervised, the new rule requires them to disclose their pricing plan, terms, and conditions to customers in advance. This is a significant change from the previous situation.
In addition to disclosing and giving evidence of their funding sources, the apps are obliged to notify the regulator before releasing new goods or making modifications to existing ones. This is in addition to the requirements that they disclose their sources of funding.