Mobile lenders in Kenya shame their borrowers by leaking their details to friends, relatives, and people in the contact list. This tactic is used to have the borrower pay up to avoid further shaming. But this might be a thing of the past if a new law sees light of day.
In the Central Bank Amendment Bill 2021, National Assembly Committee on Finance and National Planning has added a clause that will now allow the Central Bank of Kenya to revoke the permits of digital lenders who breach the confidentiality of personal information to pursue defaulting borrowers.
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“The bank may suspend or revoke a licence by written notice to the holder of the licence, if the licensee (digital lender) is in breach of subsection (2A) or the conditions of the Data Protection Act or the Consumer Protection Act,” the bill reads. At the same time,the CBK will also have powers to revoke or suspend licences of digital lenders who do not disclose full information on loan facilities to borrowers, in line with the Consumer Protection Act.
Further, the Data Protection Act bars sharing of data with third parties without consent and gives individuals the right to be told when their data is being shared and for what purposes. The act further compels firms to disclose to individuals and customers the reasons for collecting their data and to ensure that the confidential information is safe from infringement by unauthorized parties.
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When taking a mobile loan, borrowers are required to give their personal information, including the amount of salary they earn, and their national identification number. Besides debt shaming borrowers, many mobile lenders in Kenya have been using these details for marketing purposes, by leaking them to third party agencies without the consent of borrowers.