KCB and Competition Authority Finalize Settlement on Misleading Credit Card Ad Dispute
The Kenyan Competition Authority (CAK) has reached an agreement with KCB Bank Kenya after a customer filed a complaint regarding misleading credit card advertisements. The issue arose from a mismatch between the advertised benefits and the actual terms of the KCB Platinum Credit Card.
A CAK report stated that KCB promoted a 45-day interest-free period for Platinum Credit Card users. However, a customer, Mr. Anthony Nderitu, was charged interest despite expecting the interest-free period. The confusion was compounded by unclear communication about repayment cycles and credit billing.
Mr. Nderitu borrowed Sh240,000 using his KCB Platinum Credit Card, which incurred a six percent upfront interest charge. The bank’s website mentioned a 45-day interest-free period, leading Mr. Nderitu to believe this grace period would end on April 30th, 2022. He paid off the total amount (Sh254,602) on April 23rd, 2022, including the upfront interest on the cash advance.
Upon reviewing his credit card statement, Mr. Nderitu found unexpected charges amounting to Sh21,581. This included a late payment interest of Sh12,724 and a debit interest of Sh8,857. When he inquired about these charges, he was informed that credit card billing occurs on the 15th of each month, with payment due by the 30th. His failure to make a payment by March 30th, 2022, resulted in the late payment fee and additional interest.
“Information on the bank’s website indicated that Platinum Credit Card holders were entitled to a 45- day interest-free period. Therefore, the complainant expected this period to lapse on 30th April, 2022. On 23rd April, 2022, the complaint settled the full amount due (Sh254,602), inclusive of the aforementioned six percent cash advance interest. Upon interrogating the statement of the credit card, the complainant discovered the bank had charged a late payment interest of Sh12,724 and a debit interest of Sh8,857, totaling Sh21,581,” CAK notes in its report.
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The core issue was that Mr. Nderitu, like many customers, was not adequately informed about the billing and repayment cycles. CAK’s investigation found that KCB’s lack of complete disclosure regarding loan terms led customers to incur unexpected charges.
“The complainant had not been informed of the billing and repayment cycles beforehand,” CAK noted.
This incident highlights a broader issue of unfair practices within the banking sector. For instance, in a similar case, Stanbic Bank had to reimburse a customer, Mr. Phillip Manje, Sh7,282 for excess interest charged on his credit card for an outstanding amount of Sh811.
Similarly, Family Bank had to refund a former employee Sh1.4 million related to a mortgage loan. The bank had promised her a 20 percent waiver on the loan even after she left employment in 2015 but later retracted this promise and charged the amount when she was unable to make the agreed payments.
Other banks facing ongoing investigations from the Competition Authority of Kenya include NCBA Bank, DIB Bank, and Faulu Bank.
