Premium
Help! Mobile loan debt collectors are harassing us
Digital lenders often violate the law by unlawfully accessing borrowers' phone contacts.
My wife started taking mobile loans from digital lenders, and they have been making incessant calls asking her to repay. They have started calling me and other people on her phone book, I thought a law was passed recently prohibiting such harassment? What should she do?
Dear Concerned Husband,
When discussing digital money lenders and borrowers, whether they are banks, individuals, or groups, it's important to establish a clear understanding of certain truths within the legal context. Fundamentally, there should be a distinction between honesty and dishonesty. These two human attributes represent opposing sides of a moral coin and do not necessarily require legal or policy frameworks to be understood.
However, it is essential to recognise that Article 27, Clause (1) of the Constitution provides equal protection to both lenders and borrowers, regardless of their business intentions or behaviour. It is irrelevant that they come together for a common purpose, with one acting as a debtor and the other as a creditor.
In many cases, a borrower voluntarily seeks out a loan and agrees to the terms of borrowing and repayment. This transaction involves a lender and a borrower, both of whom are private entities engaging in a business arrangement where the borrower accesses funds for various reasons. In return, the lender expects to recover the loan amount, typically with interest, according to an agreed-upon schedule. Both parties are bound by a business contract that must be honoured and fulfilled.
Typically, as part of this contract, the lender requires the borrower to provide an asset or collateral in exchange for the funds provided. According to the doctrine of privity, only the lender and borrower are considered the primary parties accountable for fulfilling the terms specified in the loan agreement.
A lender, such as the Savings and Credit Cooperative Organization (SACCO), has the right to call on a borrower’s guarantors if the borrower fails to repay within the agreed timeframe and does not provide valid communication to explain the failure. According to the Cooperative Act, this is because the guarantor risks part of their deposits as collateral for the loan, which is often larger than their own deposits.
Both the lender and borrower need to recognise that the law protects consumers. The borrower can refer to Article 46, which grants certain rights, including access to goods and services of reasonable quality. Additionally, paragraph (b) of Clause 1 ensures that consumers have the right to information necessary to fully benefit from goods and services.
Paragraph (c) emphasises that consumers have the right to protect their health, safety, and economic interests, as well as the right to compensation for any loss or injury resulting from defects in goods or services.
Digital lenders often violate the law by unlawfully accessing borrowers' phone contacts. They may go further by contacting individuals in the borrower's contact list to pressure them into ensuring repayment of the loan. The Data Protection Act of 2019 explicitly prohibits the collection and sharing of personal data without the individual’s consent. This mandate is reinforced by the Central Bank of Kenya’s Digital Credit Providers Regulations of 2022, which also forbids digital lenders from sharing customer information without permission.
This protection is grounded in Article 29 of the Constitution, which guarantees every individual the right to privacy. For example, the digital lenders from whom your wife borrowed money should be aware of cases where the Office of the Data Protection Commissioner has taken action against such breaches. A notable instance is the 2023 Fadhili Microcredit case, in which the company was fined 5 million Kenyan shillings for accessing users’ contacts and contacting their family and friends without permission, thus causing embarrassment to the borrowers.
With the understanding that the law protects borrowers from shame, it is important to recognise that access to justice—a right outlined in Article 48 of the Constitution—is a principle that should benefit both borrowers and lenders equally. This means that borrowers are expected to honor the repayment commitments made when they acquired their loans.
Honesty involves speaking, living, and interacting with a high degree of truthfulness. According to certain principles of equity, borrowers are obligated to repay their debts. The law of equity promotes fairness and complements established legal rules rather than contradicting them. Moreover, another principle emphasises that those seeking legal remedies must come with "clean hands."
In this context, a borrower cannot claim to be acting fairly if they have engaged in wrongdoing. Ultimately, the principle of equity dictates that a wrongdoer cannot unjustly benefit from their actions. Therefore, it is appropriate for your wife to repay what she borrowed.