CBK Warns Against Fraudulent Mobile Loan Applications

  • The government, through its regulatory bodies, has raised a red flag over the emergence of multiple unauthorized financial service providers, a majority being online loaning applications.

    In a notice to the public, the Central Bank of Kenya (CBK) and other industry regulators have asked Kenyans to be extra-vigilant over a rise in the number of unlicensed online pyramid schemes, credit and saving schemes and the loan applications accessible on phone.

    The fraudulent products have these 9 characteristics;

    1. They require a payment of a registration fee.
    2. They ask members of the public to make savings before qualifying for a credit facility
    3. They provide unusually high returns, with little or no risks or without disclosing related risk

    [caption caption="Most of the the entities rely on social media marketing to trap unsuspecting borrowers(PHOTO/COURTESY)"][/caption]

    4. They rely on investment strategies that are not explained or that are not well understood.

    5. They may require the recruitment of more clients to earn points and qualify for more benefits such as bigger loans.

    6. They do not have a registered physical address information and display non-existent telephone numbers, websites and addresses.

    7. They copy the look and feel of genuine mobile loan applications of known and licensed financial institutions.

    8. They do not have customer care helplines or support mechanisms.

    9. They are not registered, licensed or regulated by any regulatory body in Kenya.

    “Members of the public are reminded to confirm the authenticity of financial services and products with financial institutions, particularly where registration fee or saving is required,” warned the authorities.

    [caption caption="Most of the the entities rely on social media marketing to trap unsuspecting borrowers(PHOTO/COURTESY)"][/caption]

    The authorities also advised that details of authorised operators can be accessed through the CBK, KRA, Capital Markets Authority, the Insurance Regulatory Authority, Retirement Benefits Authority and the Sacco Societies Regulatory Authority websites.

    “It should also be noted that all legitimate businesses and entities in Kenya are registered and authorised by the national and county governments and should display certificates of registration or business permits. Members of the public should demand to see these certificates and/or business permits if they are not displayed by the institutions,” the notice reads.

    The public has also been asked to report volunteer and institutions offering fraudulent services upon victimization or suspicion.