A wave of court cases linked to digital lender LendPlus is raising questions about how the company recovers money from Kenyans who take short-term loans.
Over one weekend, LendPlus filed more than 1,000 cases at the Small Claims Court, according to the statement provided. The large number of cases has raised concern over the pressure being placed on a court that was established to provide quick and affordable justice to ordinary people.
The cases involve borrowers who took loans for different reasons, including emergencies such as school fees, medical bills and household needs. While the amounts borrowed may have been relatively small, some borrowers are now facing claims that are significantly higher than the money they originally received.
One example involves a borrower who took a Sh30,000 loan and was later faced with a demand for Sh60,000. In another case, a borrower took Sh47,000 and was informed through the lending app that the amount to be repaid after three weeks would be Sh62,000. After the repayment deadline passed, the amount reportedly rose to Sh123,000.
The borrower declined to pay the higher amount and was subsequently taken to court.
Such cases have brought renewed attention to the cost of digital borrowing in Kenya. Digital lenders have made it possible for people to access money within minutes, often without the lengthy processes associated with traditional banks. For many borrowers, the loans can provide a quick solution when there is no other immediate source of cash.
The problem arises when delays in repayment lead to rapidly increasing amounts.
The statement points to daily interest rates of about one per cent and questions whether some of the amounts being demanded from borrowers comply with Kenya’s legal requirements. It also raises the issue of the in duplum rule, which limits the amount of interest and related charges that can accrue on a loan after default.
LendPlus operates under a licence from the Central Bank of Kenya. Its regulated status means its lending and debt recovery practices can come under regulatory scrutiny, particularly where borrowers dispute the amounts being demanded.
The growing number of cases also puts pressure on the Small Claims Court. A court designed to handle disputes efficiently can face difficulties when hundreds or thousands of similar debt cases are filed within a short period.
The situation raises important questions for regulators and the Judiciary. They include whether the amounts being claimed are lawful, whether borrowers receive clear information about the total cost of loans before accepting them and whether the charges imposed after missed payments are properly explained.
For borrowers, the issue is not necessarily about avoiding repayment. Many simply want to understand why a loan that started at a certain amount can grow sharply after a short delay.
Digital lending remains an important source of emergency credit for many Kenyans. But easy access to money should also come with clear pricing, reasonable repayment terms and fair debt recovery.
The growing court cases involving LendPlus therefore deserve closer attention. If borrowers are being required to pay amounts they cannot reasonably understand or verify, regulators have a responsibility to examine the practices and establish whether they comply with the law.
For a person seeking a small emergency loan, the consequences of missing a repayment deadline should not come as a surprise. What appears to be quick financial help can otherwise end with a court summons, leaving borrowers to deal with both the debt and the legal process.
