Almost all of these companies make their money by <a href=""></a> providing short-term loans with high interest rates

One solution to this problem has been to flag defaulters to one of Kenya’s three credit reference bureaus (CRBs), effectively locking them out of the credit market

But that’s often where transparency around the business model ends. Since there is no regulatory framework governing fintech, it is hard to know who exactly owns an app or even where the money is coming from. Users can simply delete the app and move on. It’s unclear how effective this strategy is, but it’s frequently used. Between 2014 and 2017, about 2.7 million Kenyans were negatively listed with a CRB, 15 percent of them for defaulting on loans of less than about $2. Last year, “how to check CRB status” was among the most-Googled questions in Kenya, between “how to be successful in life” and “how to get pregnant.”

Before long, digital lenders started looking into other methods of recouping their investments. Skip tracing, the ancient art of finding someone who owes you money and making them pay, was virtually nonexistent among fintech companies until early 2018. Coincidentally, that was the same year that Opay, a fintech company partially owned by the software-maker Opera, launched OKash in Kenya. The majority of Opera’s operations had been bought by a consortium of Chinese investors two years earlier, and shortly afterward, the company went on an expansion spree, announcing plans to invest $100 million in East Africa. While Opera’s then managing director, a former banker named Edward Ndichu, said at the time that the app would protect users’ personal information, he never explained how the company planned to safeguard its financial investment. But the answer was buried in OKash’s terms and conditions: When users download the app, they give it permission to access their contacts.

The absence of regulation has many perks for the sector and one major liability: As companies soon discovered, if a user does not pay back what they have borrowed, plus interest, there is little a digital lender can do

Reports of OKash using social shaming started to surface almost as soon as the app went live. And people immediately felt the fallout. A University of Nairobi student told me on Twitter that the texts cost him his relationship, and another user told me his boss almost fired him for embarrassing the company. Another user, who wished to remain anonymous, told me he had read the fine print and knew OKash that would contact some people if he didn’t repay. “But of all people,” he marveled, “MY MOTHER IN LAW?”

Some said this felt as if a belligerent stranger had walked into their living room and started shaking them down for money. A user identifying herself as Clare Wambui claimed in the Google Play comments section that she had been repeatedly contacted about an unpaid loan by representatives who used “abusive and threatening” language and increased her interest rates. “I wish I knew where your offices are [so] I [could] come call you those names you call your clients,” she added.

Criticism of these practices has steadily grown, and in January, a spokesperson for OKash told Bloomberg that the app no longer utilized contact lists as leverage over defaulters. Our reporting found otherwise. Customer posts in the Google Play Store allege that the company continued to text and call its users’ contacts through February of this year. Moreover, while OKash was updated in January to conform to Google Play’s new rules concerning payment periods for credit apps, it did not remove clause 8 – which grants it access to Kenyan users’ contact data – from its terms and conditions. (In response to a Rest of World query, an Opera spokesperson said that the company is “currently working on the latest updates of the terms and conditions in the app.”)

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