This archive report was first published on 21 July 2019.
Published on July 21, 2019, a report by TransUnion Credit Reference Bureau estimated that between 2.3 million and 2.5 million people had defaulted on loans based on monthly reports by traditional and digital lenders.
According to the report, the defaulters would translate to about 30 per cent of the 7.5 million people who take digital loans advanced by banks or mobile loan applications.
While debt distress owing to factors such as lack of consumer awareness, stacking loans from different lenders, and outright lack of a repayment plan have led to many defaults and subsequent negative listing in CRBs, fraud is emerging as a challenge that consumers and digital lenders have to be wary about.
TransUnion CRB Chief Executive Billy Owino noted that fraud is becoming a big problem, with the number of fraudulent applications rising from under one per cent about two years ago to 1.8 per cent of mobile applications.
"Fraud is becoming a big problem. We are having too many cases of defaults reported that are coming out of fraudulent applications. However, those are cleared easily but this depends on when," he said.
DLAK Chief Executive Robert Masinde also noted that fraud is the biggest source of the loans that are in default at any given time, with fraudsters using stolen ID and name information to obtain extra SIM cards and borrow from multiple lenders.
"What they do is take your ID and name, which are easy to find and that is all they need to obtain an extra SIM card and use it to borrow," said Masinde.
DLAK is working on a fraud exchange where lenders can report suspicious activity in real-time to prevent further fraud.
