The Competition Authority of Kenya (CAK) is set to launch an investigation into the digital sector after receipt of multiple complaints of abuse by digital lenders. The complaints raised include concerns about exorbitant interest rates, non-disclosure of information regarding the loans, requirements to repay the loans in currencies other than the Kenyan shilling, and irregularly short repayment periods, among others. All these issues have also drawn attention to concerns related to privacy violations.

As digital lending continues to expand and mature, it presents both opportunities and risks. For many Kenyans, these platforms provide quick and accessible credit. However, the same platforms have also been accused of exploiting vulnerable consumers, taking advantage of limited regulation and low levels of financial literacy. The issues now under examination are not merely a matter of poor business practice; they raise serious legal and policy questions that fall squarely within CAK’s mandate.

The Role of CAK in the Digital Credit Ecosystem

The CAK is responsible for promoting and safeguarding competition and consumer welfare in all sectors of the economy. Its core functions include preventing anti-competitive practices, such as the abuse of market dominance, restrictive trade agreements, and unregulated mergers. Through its Consumer Protection Department, the CAK investigates false or misleading representations, unconscionable conduct, and unsafe or unsuitable goods and services.

The Department is also responsible for enforcing consumer product safety standards, supporting the formation of consumer bodies, and sensitising the public about their rights under the Competition Act. Within the digital lending context, this positions the CAK as a key player in ensuring that market growth does not come at the expense of consumer rights.

Legal Lens: A Range of Possible Offences

Section 56: Unconscionable Conduct

Based on the complaints received, several potential offences may arise. Part VI of the Competition Act, 2010, under Section 56 prohibits conduct that is “unconscionable in all the circumstances”, meaning conduct that is unjust, exploitative, or extremely one-sided, particularly toward consumers.

To determine unconscionable conduct, the Act provided for a set of factors to be considered. These include:

• Taking advantage of the imbalance in bargaining power between the lender and borrower.
• Imposing terms or conditions that are not reasonably necessary to protect the lender’s legitimate interests.
• Failing to ensure the borrower understands the loan terms.
• Applying unfair pressure or aggressive tactics during recovery.
• Charging fees or requiring repayments under conditions that have not been adequately disclosed.

These provisions are especially relevant in cases where consumers are misled about the total cost of borrowing, subjected to unrealistic repayment timelines, or coerced into accepting terms they did not fully understand.

Further, Section 56(3) and (4) explicitly prohibit the imposition of undisclosed charges or unilateral fees. If these have been common in digital lending contracts, they could constitute direct violations of the Act.

Section 55: False or Misleading Representations

Section 55 of the Act prohibits businesses from making false or misleading statements in material respects. In digital lending, this covers the accuracy and transparency of claims about loan terms, including interest rates, fees, repayment periods, penalties, and the actual cost of credit. If lenders advertise a low rate but do not disclose hidden fees or specify repayment schedules that differ from those enforced, this could constitute a breach of that section. Even omissions, such as failing to clearly state that repayments must be made in a foreign currency, may be considered misleading if they significantly influence the consumer’s decision-making.

Section 24A: Abuse of Buyer Power

Although Section 24A is traditionally applied in supplier–buyer relationships, its principles are increasingly relevant in digital financial services where lenders enjoy significant market leverage. In many cases, digital lenders dictate the terms of engagement unilaterally, often leaving borrowers with little room for negotiation or redress. Abuse of buyer power can manifest through unfair contractual terms, sudden changes in conditions, or the imposition of additional obligations after the agreement, such as unexpected repayment channels or currency conversion requirements. If such conditions are not negotiated transparently and proportionately, they may amount to an abuse of power. CAK has previously interpreted buyer power more broadly to address asymmetries in digital and platform economies, making this provision particularly relevant in the fintech space.

Complementarity with Other State Agencies

While the Central Bank of Kenya (CBK) and the Office of the Data Protection Commissioner (ODPC) are both active players in regulating digital lenders, their mandates differ significantly from that of the Competition Authority of Kenya (CAK). CBK is primarily concerned with prudential regulation, licensing, liquidity, and financial stability. It ensures that digital lenders meet minimum capital requirements, adhere to fair lending principles, and do not pose systemic risks to the financial sector. However, CBK does not typically investigate market structure, pricing abuse, or contract fairness, areas that fall squarely within the CAK’s mandate for consumer protection and competition.

The ODPC, on the other hand, focuses on how personal data is collected, used, and protected under the Data Protection Act. It plays a critical role in examining complaints related to data misuse, including unauthorised sharing, lack of consent, and intrusive debt collection practices. However, while ODPC ensures that digital lenders comply with data privacy laws, it does not examine the broader question of whether consumers are being exploited through unfair terms, misleading information, or the abuse of market power. That is CAK’s job. These three regulators, therefore, occupy different but complementary spaces, and meaningful consumer protection will depend on how well they coordinate to close the regulatory gaps that persist in the digital lending landscape.

A Timely Investigation

Digital credit continues to provide much-needed access to financing, but that access must be ethical, transparent, and lawful. Consumers must not be left to navigate complex and often exploitative lending environments without meaningful protections. By investigating digital lenders under multiple provisions of the Competition Act, CAK is signalling that innovation does not override accountability. These investigations will provide legal clarity and underscore the importance of a fair, well-regulated digital financial ecosystem.

The outcome of CAK’s probe could reshape the future of digital lending in Kenya. It offers an opportunity to enforce long-standing consumer rights, examine potential anti-competitive behaviour, and push for transparency in digital financial products. The law is clear: no business, regardless of its innovation, is exempt from respecting consumer welfare and fair market principles. As the digital economy continues to evolve, so too must the regulatory framework that supports it. The CAK investigation is a necessary first step toward a more accountable, inclusive, and consumer-friendly future.