Mogo Auto Ltd, a Kenyan buy-now-pay-later (BNPL) firm popular among gig workers, has been hit with a class action lawsuit over alleged predatory and unfair lending practices, a case that could have far-reaching implications for the country’s fast-growing asset financing market.
Three borrowers — Caroline Nderitu, Wilson Mbogo Gikonyo, and Joseph Muraya Wangari — filed the suit at the High Court in Nairobi on behalf of thousands of Mogo customers, claiming the lender’s loan contracts are exploitative and designed to conceal the actual cost of borrowing.
“That the continued spread of these predatory lending schemes threatens the financial security and constitutional rights of consumers under Articles 46 and 47 of the Constitution,” the customers claimed in their filing. “This situation calls for the urgent intervention of this Honourable Court to address the systemic abuse and to allow the institution of a representative suit in the public interest on behalf of affected borrowers.”
Mogo did not immediately respond to ’s request for comment.
Excessive interest rates
The petitioners allege that Mogo, which provides logbook loans and motorbike financing, charges excessive interest rates, pegs loans to foreign exchange movements without adequate disclosure, and imposes hidden costs through compulsory insurance premiums. They also accuse the company of using heavy-handed repossession tactics that leave borrowers without recourse once they default.
“The respondent in its lending and recovery operations, characterized by systemic and identical practices including dollar-indexing of Kenya-shilling loans, bundling of compulsory insurance premiums, concealment of true interest rates, and repossession of vehicles and motor cycles without due process, all applied indiscriminately to all borrowers,” the borrowers claimed.
The borrowers want the court to declare Mogo’s lending model unlawful and order compensation for affected clients. Justice Freda Mugambi directed that Mogo be served with court papers and given 15 days to respond, with the case set for mention on December 15.
The case follows mounting regulatory scrutiny of digital and asset-based lenders in Kenya, many of which operate outside the traditional banking system. In October 2024, the Competition Authority of Kenya (CAK) fined Mogo KES 10.8 million ($83,600) for engaging in “false, misleading and unconscionable” practices, a finding that the borrowers have cited in their case.
Mogo, part of the Latvia-based Elevation Group, has expanded rapidly across Africa by offering quick loans to informal gig workers, including ride-hailing drivers and small business owners.
If successful, the class action could prompt regulators, including the Central Bank of Kenya, to tighten oversight of non-bank lenders, whose share of consumer credit has grown sharply over the past five years.
