• 215 lenders registered, 47 delisted, over 71 apps operating illegally
• 88 illegal firms on watch list
• Better regulation underway – FCCPC
• Citizens Gavel: We received over 600 complaints lately
Worsening economic downturn and attendant hunger may have widened the floodgate of activities for digital money lenders, with many loan sharks targeting poor and vulnerable Nigerians.
The Digital Money Lenders (DMLs) all offer instant soft loans without the bureaucracy of traditional banking halls. But the challenge is the hidden interest rates on the credit, creditors’ unlimited access to phone contact details of applicants, and the cyberbullying under the guise of name-and-shame of defaulters and also their contacts.
While the DML market gained ground during the COVID-19 era, the recent economic hardship has led to a new influx, the majority of which are owned by foreigners, especially Chinese. They offer loans in the range of N5,000 to N100,000-plus credits.
Currently, there are 215 fully approved digital lenders registered with the Federal Competition and Consumer Protection Commission (FCCPC). However, there are over 100 unlicensed online loan platforms freely operating, and most are notorious for alleged exploitation and abuse of the privacy rights of Nigerians.
Findings showed that the target is often the low-income earners who have accessible phone contacts. Because many borrow to feed, the rate of default is very high, and the debt recovery mechanism is uncensored, leading to glaring cases of breaches in the data privacy rights of Nigerians.
An Abuja-based lawyer, Ali Gaidam, had an experience with a digital lender that kept “bombarding” her phone with “easy loan” messages. Shortly after filling in the details on the app, he got a N10,000 loan at a 20 per cent interest rate and a maturity date of seven days.
According to Gaidam, the credit relationship went well until he defaulted at the 11th attempt.
“When I defaulted, which was sometime at the end of August, I began to receive multiple text messages from different sources saying they were Recovery Agents. The agents kept sending threatening messages to all my contact lists including my wife, colleagues, mother-in-law, and uncles. The harassment went further with several threats and curses and that I had been declared ‘wanted’,” Gaidam said.
A Lagos-based Emamoke James similarly had sour tales from NairaPlus loan platform where her spouse submitted her details to acquire N13,500 at a 1.3 per cent interest rate, repayable in seven days. She narrated that “Because of default, the interest rates that have incurred on the debt is about N70,000 and that is not even the issue. But the life-threatening messages and insults are too much, and I have been the one suffering it.”
Currently, there are over 71 unregistered loan apps notorious for defamation, harassment, and breach of data privacy rights.
Among them are: Mint Bag, Link Loan, Ncredit, Nownow, Money Naija, Speedloan, Cashpaddie, Careginance, Nairanaija, Cashrun, Swiftnaira, Cashhall, Kashkash, Onaira, Kwikcash, Newcredit, Tiger Credit, Link Loan, Easy Cash, Golden Wallet, Super Money, Cycle Lending Company, We Credit, Fincole NG, Easy Kash and L Credit.
These digital lenders are not registered with FCCPC. They are not on the websites of approved firms.
According to FCCPC, 88 of such illegal firms are on its watchlist, while 47 offending firms have been delisted. There are also 10 such firms enjoying FCCPC’s waivers because they are registered with the Central Bank of Nigeria (CBN).
Associate lead at Citizen Gavel, a non-governmental organisation that works on consumer protection matters, Funmi Oderinde, a lawyer, said the organisation has received over 600 complaints about loan app defamation.
She explained that loan app defamation is a criminal offence in Nigeria, adding that such loan apps that engage in spreading damaging information against their customers are liable to imprisonment for at least one year.
“Another law that has been broken by this loan app is the Cybercrime Prohibit and Prevention Act of 2015, which provides a framework for prosecuting cybercrime. It states that any person, who knowingly or intentionally transmits any communication through a computer system or network to bully, threaten or harass another person or place that person in the position of fear of death, violence, or bodily harm, is liable to imprisonment of 10 years and a fine of N25 million.
“This is why we are trying to put out a class action to put an end to loan app defamation in Nigeria. We want to ensure Nigerians will no longer be victims of such illegalities,” she explained.
Oderinde said her organisation has cases of atrocities that are being committed by these loan apps to recover their debts from defaulters.
Her words: “This defamation must stop. At the citizen gavel, we are working with the government to stop this act. We discovered that the atrocities are committed by those apps that are not registered.
“This is in clear breach of section 35 of the Data Protection Act. It is a criminal offence for a digital loan app to access the details of their customers to recover its money.”
Also, the Operations Lead at Gavel, Oluwafemi Ajibade advised Nigerians to patronise loan apps that are registered and licensed.
According to her, it is easier to hold such firms accountable for defamation and get justice than those that have no legal status.
She pointed out that Nigeria can create a safer borrowing environment, protect borrower’s rights, and ensure that loan apps serve as responsible and reliable financial resources for individuals in need.
The Executive Director, LightRay Media and Civic Intelligence Advocate, Lady Ejiro Umukoro said all Nigerians must come together to curb the menace.
“We need to come to that point where our citizens become more civic, intelligent, economically intelligent, socially intelligent, and financially intelligent.
“There’s no way we want to combat these crises if we also do not take self-accountability. There is so much to be done in terms of citizens’ awareness, smartness and thinking strategies,” she said.
According to her, the fact that all of those are happening and the Nigerian Communications Commission (NCC) is not even sitting up to analyse, monitor and investigate them is a shame.
“Even the Nigerian Bureau of Statistics (NBS) seems not to care about these Loan app agents in Nigeria. Unfortunately, this is happening in Nigeria and Nigerians are left without protection.
“No law in Nigeria allows any business organisation to threaten your life, not even an individual can do that. It means that as a people, we need to know our rights.
“In a situation where a loan app needs to ask you for access to your camera, access to your audio, access to your images, you need to stop and think ‘why will a loan company try to have access to a whole of these’ which means they are data collectors,” she exclaimed.
Umukoro advised Nigerians to patiently read terms and conditions, before signing up for online apps.
She stated that some Nigerians are also gullible for taking loans from firms they do not know their addresses and also default in paying back, adding that the modus operandi of those firms is to exploit and abuse people’s rights.
Director General, Confab for Human Rights Actualisation, Omemiroro Ogedegbe said the loan app operators and their managers have resorted to extreme tactics that cause emotional distress in Nigerians using obituary announcements, threat to life, defamation, among others.
These conducts, Ogedegbe said, violate the private and personal lives of citizens.
According to her, the transaction between the individual and the loan companies is private, therefore, disclosing it to a third party is a gross violation of the right to private personal life.
“The operators contact third parties upon default in payment, which ought not to be so. They are expected to contact the third parties and let them know of the intention of the loan seekers to use them as guarantors,” he advised.
Loan, he said, is a domestic and contractual obligation between individuals which is only enforceable by a civil litigation process.
“The act of arrest and blackmail is unlawful. The option open to the loan organisation is to file a civil action against the defaulters,” she declared.
Managing partner at Whiteboard Partners LP, Oluwaseun Ojeleye believes that the activities of unregistered loan companies about data privacy in Nigeria have become a cause for concern.
The lack of regulation around loan sharks and data privacy in Nigeria, he noted, is worrisome.
“People’s data is at risk, and there is little protection in place. This is a complex and multifaceted issue with many parties involved, including the government through its agencies like the National Information Technology Development Agency (NITDA), the FCCPC, the CBN and individuals.
“The government has a responsibility to enact laws and regulations that protect people’s data. The FCCPC should enforce these laws and hold companies accountable for their actions.
“The CBN should regulate the financial sector, including lending practices, and ensure that people’s data is protected. And individuals should be educated about their data rights and how to protect themselves online,” he advised.
Ojeleye suggested that the government should make new laws and regulations to better protect people’s data, while advising the FCCPC and CBN to increase their enforcement of existing laws and regulations.
According to him, these actions could make a significant difference in protecting people’s data privacy and if fully implemented, could make it more difficult for unregistered loan companies to exploit, harass, and defame citizens.
Meanwhile, FCCPC has said it would address the challenges this year.
According to the regulatory body, default in repayment of loans accounts for the violation by lenders.
The immediate past Chief Executive Officer of the Commission, Babatunde Irukera, recently said the indebtedness to the DMLs has become a big industry issue.
According to him, the Commission would be developing a new regulatory framework to address Nigerians’ rising indebtedness to DMLs, known as loan apps .
While the Commission has succeeded in reducing abuse and harassment by the loan apps, he said, Nigerians taking loans from the platforms have continued to default.
Irukera said the rising debt could lead to the collapse of the digital lenders that are also playing critical roles in the economy.
He, however, stated that there is a reduction in the use of harassment and defamation of lenders by the loan apps, adding that such has instead led to an increase in defaulting by the borrowers.
“One of the big issues that we’re seeing is that there’s now a significant level of loan default because people are not able to use these unethical and inappropriate loan recovery mechanisms and I’m insistent that you cannot say to me that the only language Nigerians understand is to abuse them.
“We must necessarily do the work no matter how hard it is to find a more sensible way to recover loans because I also agree that if these digital money lenders are unable to recover their loans and drop out of the market, it’s a consumer protection problem because of those who need those types of short-term unsecured lending.
“So, we must find the balance. And some of the regulations that will come out in 2024 will be a broader approach to responsible borrowing and lending by individuals and corporations.
“I’m hopeful that the future of what we’re building is that even school landlords would be able to report to a centralised credit system about the conduct of tenants, students, and parents so that we can know each person’s level of fiscal responsibility or credit wordiness,” he said.
He pointed out that the Commission discovered that most people defaulting are the same taking loans from several other apps.
(Guardian)
