Mogo faces class action suit over predatory lending

Mogo Auto Limited, a loans company, wants a class action suit filed by three people at the Milimani High Court’s Commercial Division over its alleged predatory, unfair and unconscionable commercial conduct dismissed.

In their response, the company says that the case is incompetent, misconceived and bad in law, adding that the petitioners have not been identified or described with reasonable certainty.

The case was filed by lawyer Simon Mburu on behalf of Caroline Nderitu, Wilson Mbogo and Joseph Muraya.

“The Plaintiffs bring this suit on their own behalf and, with leave of this Honourable Court, on behalf of a wider class of Kenyan consumers who have been subjected to similar predatory lending practices, unconscionable contractual terms, intimidation, and unlawful repossession methods employed by the Defendant,” they said in court papers.

Nderitu, who resides in Nanyuki, went to one of the lending companies in April 2024 to apply for a Sh250,000 loan.

As the application was pending, she said in court papers that she received a call from a man identified as Erick Maina, who claimed that he works with Mogo as an agent.

Nderitu alleged that Maina disclosed to her the details of her private loan application with the other company, including the amount.

She further alleged that Maina told her that the company she had gone to for the loan was inefficient, unreliable and bureaucratic and would not approve her loan.

He allegedly said that the continued wait on the lending company would only delay her ability to access the funds she required.

According to Nderitu, the agent told her that Mogo was more flexible, easier to access and generally more consumer-friendly than the other company.

The petition says that all she needed was to surrender her logbook as security at Mogo’s Meru office which she did and a valuation of the car was done but she never got the report.

“Despite repeated requests, the Defendant failed to provide the loan agreement, repayment schedule, or valuation documents at the inception of the contract. They were only provided more than one year later, after her motor vehicle had already been repossessed and the contract terminated,” reads the petition.

Nderitu says she got Sh250,000 and was to pay it back in monthly instalments of Sh17,000.

The petition alleges that after three months, she was pressured by the company to top up the loan with Sh150,000, which inflated her loan balance to Sh528,268.

“The Defendant further pegged her loan repayments to the United States Dollar despite the loan being denominated in Kenya Shillings, thereby inflating her balance through foreign exchange manipulations.”

She alleges that she disclosed to Mogo that she was unemployed and suffering grief and mental health difficulties following bereavement, but the company went ahead to proceed with the loan, telling her that the true interest lay in collateral, not in her capacity to repay.

In July 2025, the petition says that she missed two instalments due to car repairs and Mogo dispatched menacing agents who intimidated her in public and forced the surrender of the vehicle.

On July 15, Mogo allegedly terminated the loan contract and threatened to sell the vehicle within five days unless she clears the arrears, and on July 30, the vehicle was sold but she was never given the records of advertising or sale.

On his part, Mbogo alleges that he entered into a loan agreement with Mogo for asset finance of Sh280,000 to buy a vehicle worth Sh350,000 and made a deposit of Sh70,000.

According to the agreement, Mbogo says in the petition that he was to pay Sh21,000 a month but the loan was pegged on US dollars despite it being denominated in Kenya shillings.

The petition says that after nine months he had paid some Sh247,000 when the vehicle got into an accident and was declared a total loss.

“The Defendant had imposed an insurance cover costing KES 5,262 per month, far above prevailing market rates, and falsely recorded in the loan agreement that the Plaintiff had voluntarily requested the Defendant to provide insurance, when in truth it was forced upon him.”

According to the court papers, the insurer paid Sh380,000 claim and instead of reconciling the account Mogo allegedly appropriated the insurance proceeds and verbally informed Bogo that he still owed Sh6,000.

He claimed that this was despite his repayments and insurance payout exceeding the financed asset value.

He claimed that Mogo proceeded to list him on the Credit Reference Bureau, which showed that he was reckless and unconcerned with his repayment ability.

Muraya alleged that he wanted to purchase a vehicle from a car yard, and Mogo required him to pay Sh110,000 and they would pay the rest.

He further says that the company gave him the loan but never disclosed the interest rate, repayment structure, or financial obligations.

He alleged that the loan documents for execution were only provided to him after he had paid the deposit and since he did not want to risk losing it, he signed the papers.

“The loan agreement presented to the 3rd Plaintiff contained terms that were vague, harsh, and oppressive. The Defendant represented the interest as a flat rate of 2.4 per cent per month, which on its face appeared reasonable but in reality, translated into an annual rate exceeding seventy percent (70%).”

According to Muraya, the loan was in US dollars and Mogo bundled the loan with an insurance cover loan at 10 per cent of the value asset which was far above the prevailing market rates.

Lawyer Mburu in his affidavit, said that the continued spread of predatory lending schemes threatened the consumers financial security and constitutional rights.

“That despite earlier regulatory action, including the Competition Authority of Kenya’s decision dated 4th October 2024, which fined the Respondent herein Sh10,851,473.20 for engaging in false, misleading, and unconscionable lending, the respondent has continued with the same exploitative conduct in total disregard of the law and regulatory oversight.”

In response, Mogo further said that the petition was an abuse of the court process and was designed to sensationalize the matter and attract undue publicity and unfairly prejudice their reputation and commercial standing.

“The plaintiff’s attempt to convert the present suit into a representative action is intended to circumvent procedural safeguards, multiply claims against the defendant and open the floodgates to unverified and unconnected claims.”

They argued that Lawyer Mburu did not have the requisite authority to represent the three claimants and that the case raised individualised contractual and factual issues that could not be determined in a single proceeding to common relief.

“The plaintiff’s application is premature, speculative and not supported by cogent evidence of sustaining a representative action,” Mogo said.