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Bridge Bytes: 4 apps one scandal… why Opera’s new money-lending app has been accused of ‘predatory-lending’ by leading investment firm

10 months ago by Nathan Baldwin

Money in cage

Earlier this week Opera, a browser and software platform have been forced to respond to what can only be described as a PR s#@t-storm.

Research conducted by Hindenburg (a short investment firm that bets against a company’s stock price) has suggested that all four of Opera’s money-lending apps have breached Google’s policies against ‘predatory short-term lending’. Opera currently have four apps operational in three different countries, Okash / Opesa in Kenya, CashBean in India and Opay in Nigeria.

The investigation led by researchers at Hindenburg lifted the lid on several potential breaches of Google’s policy against “deceptive and exploitative personal-loan terms”. In Google’s policy regarding money-lending apps, it states there must be at least a 60-day lending period for borrowers, however the Hindenburg report found that Opera were offering loans with as a little as 15 days lending period.


A helping hand or a lead pipe?

The message behind Opera’s money lending apps was centered around providing local people in impoverished areas with low APR rates and an alternative to credit cards. The low APR rates and apparent ‘social responsibility’ allowed them to seamlessly drift through Google’s tight defence of app policies. However, as Hindenburg reports, the low APR rates were designed to entice people in. Once seduced by the promise of low interest rates, they would enter their details in to the app along with the amount they wanted to lend.

This is where things get sneaky… according to the report the app would then deny the prospective borrower the loan they requested and instead offer them short-term loans with ‘sky-high’ rates. Hindenburg reported that as a result of these tactics, around 730% of all loans were paid late. Opera have released a statement regarding the damming report, stating that there were “‘numerous errors and misleading interpretations regarding the business”.

However, Hindenburg have been quick to hit back stating that they only “[bet] against the worst companies we can find. So, we continue to short shares of Opera.” I believe the phrase ‘buuurrnnn’ is appropriate here. And to rub chilli powder into the open wound, Opera’s stock price has fallen by 22% over the last week.


“Debt is the worst kind of poverty”

From a wider and far more consequential perspective, Opera could be blamed for facilitating the expansion of a global debt pandemic. Personal debt is becoming one of THE main contributors to economic decline and poverty. Using technology to potentially put more people from less economically stable areas in debt, with high APR rates and short lending terms is undoubtedly a step in the wrong direction. Google have not yet released a statement regarding the report, whether the allegations are true or not, hopefully the decision will set a president for future money-lending providers.


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