Google Ban Fails To Stop Payday Lending Apps In Kenya

Kevin Mwanza
Written by Kevin Mwanza
Nigerian fintech firm financial inclusion lending apps
Google has banned apps globally that offer short-term loans with high interest rates up to 200%. That did little to stop lending apps in Kenya. Photo by nappy from Pexels

A global ban by tech giant Google (GOOG) on Android apps that give short-term loans, in a move to protect consumers from “deceptive and exploitive terms”, has done little to stop lending apps from growing in Kenya.

Many of these loan apps charge their users interest rates of up to 200 percent, requiring the users to repay within a week or two, according to a report by Bloomberg.

Google announced a global crackdown on Android-based short-term loan apps in August 2019 but its efforts have not stopped new predatory loan apps from getting onto the Play Store.

These apps are extremely popular in developing countries such as Kenya where there is an explosion of mobile lending and little government oversight, leaving Google as the arbiter of which apps customers can choose.

“Our Google Play Developer policies are designed to protect users and keep them safe, and we recently expanded our financial services policy to help protect people from deceptive and exploitive personal loan terms,” Google’s spokesperson said. “When violations are made, we take action.”

It is, however, easy for predatory loan apps to take advantage of users in developing countries because violations in one country are not necessarily considered violations in another country.

For instance, despite the ban on loans that need to be repaid within fewer than 61 days, in Kenya, apps on Google Play Store offer shorter terms, thus ignoring the rule and hoping that Google does not notice.

Branch International Limited, a San Francisco-based startup, and Tala, a California based lender, which are both very popular in Kenya, said that they were told to comply by offering a longer-term option and a shorter-term option for all loans.

“The 62-day loan is just one option and they can choose shorter loans if they want,” said Mojgan Khalili, a Branch spokeswoman.

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Hindenburg Research, an investment firm, issued a report asserting that Okash, a popular lending app in Kenya run by Chinese-owned web browser firm Opera, violates Google’s policy because they only offer short-term loans despite claims that long-term loans are available.

The report added that Opera’s apps charge rates exceeding 300 percent.

Lenders sometimes openly acknowledge offering only short-term loans on the Google Play Store. “You can choose one up to 30 days”, wrote a representative of Zenka Finance Ltd, a Nairobi-based lending company, in response to a user.