The Central Bank of Kenya and the Directorate of Criminal Investigations raised concerns over the rate at which Kenyans are losing millions in pursuit of loans through mobile apps.
The DCI listed down several tricks that Kenyans fall for while warning that thousands of apps in top app stores are running a highly sophisticated and potentially harmful advertising fraud.
By downloading apps from unknown developers, one essentially gives the apps freedom over their data and phones.
The fake loan apps characteristics used to trick Kenyans were listed as follows:
1. Registration and Deposits
They request for deposits via shortcodes promising customers that they will get instant loans. They charge a certain amount of money i.e. Kshs 400 for one to complete a registration process.
Once a loan application is done, an individual is requested to pay some more money to get the loan.
2. Upfront Fees or Loan Collateral
These apps are never concerned with how the borrower will repay the loan. They don't ask for credit scores or collateral.
The apps also deduct interest from loans. For example, if one borrows Ksh 2,000, the creditors will offer Ksh 1,460 with 540 as interest. Normally a legitimate lender will deduct interest from a repayment.
3. Location
They don't have registered physical addresses and contacts. Their businesses are not registered with county or national governments.
The scammers have fake or non-existent telephone numbers, websites and addresses.
4. Models
These apps don't have their own registered Pay bill numbers and their phone numbers are always offline.
They also copy the model of legitimate mobile applications for financial institutions such as banks and registered digital lenders. They also use quite similar names.
5. Social media
Quite often, a number of politicians speak out against fake pages. Nairobi Governor Mike Sonko once denounced a page which was posing as a Sonko Rescue Team Loan creditor.
The fake apps target renowned celebrities to have netizens push the pages to appear legit.
6. Spam Emails and Rampant Calls
They also use emails to spam targets. If one defaults on a loan, they tend to bombard their contact list with threatening messages and phone calls.
7. Misspellings, Capitalization and Grammar
These apps usually have misspelled names, descriptions and have lots of errors. At times, they can even refer to a creditor with a different name. They have no customer relations services.
8. Rating
They also trick customers into rating them on Play Store before giving out credit.
In April, the CBK barred unregulated digital mobile lenders from forwarding the names of loan defaulters to CRBs.
It also tabled a bill in Parliament seeking to regulate monthly interest rates charged by the digital mobile lenders and borrowers’ non-performing loans.
The Central Bank of Kenya (Amendment) Bill, 2020, sought to empower the banking regulator to supervise digital lenders and to curb the steep digital lending rates that have plunged many Kenyans into debt traps.
