The Federal Government is reported to have threatened the death knell against any loan app that harasses customers and violate their privacy in its loan recovery drive. Governments oversight agency, the Federal Competition and Consumer Protection Commission (FCCPC), said it would delist such apps and as well ask Google to permanently take them down from its app store in furtherance of efforts to protect Nigerians from illicit tacks of some digital lenders.

No fewer than 180 apps have full or conditional approval by the FCCPC to operate in the country, and the commissions chief executive officer Babatunde Irukera was reported saying there would be no hesitation to shut down the operations of errant apps if investigations proved them liable. He noted, however, that apps yet indulging in the abuses were mostly not registered by the FCCPC and also not hosted by Google, but rather they use below-the-radar channels to engage consumers.

Many loan apps, famously dubbed ˜loan sharks, which underprivileged Nigerians are forced to patronise because they cant access credit from standard banking institutions, are notorious for their constricting loan tenors and outrageous interest rates that compound the loaned capital and render it a debt trap; and in their bid to recover the loans, the digital lenders usually invade the data of their customers to get phone numbers of contacts to whom they post defamatory messages about those customers, just so to harangue them into paying back. It would be understating things to say they make life miserable for those hapless borrowers.

Earlier this year, the FCCPC directed loan apps to register with it and has thus far listed 180 operators. Google also recently made it known that loan apps would not be allowed on its app store without regulatory approval; and in April, it announced that loan apps on Play Store would lose ability to access users contacts or photos from May 31, 2023.

Only last year, the FCCPC in collaboration with the Independent Corrupt Practices and other Related Offences Commission (ICPC), the National Information Technology Development Agency (NITDA) and the Nigerian Police raided and shuttered some financial firms located on Opebi Road, Ikeja, Lagos, that were behind the online apps. The consumer protection commission, at the time, explained that the raid was in response to customers complaints of malpractices by the operators. Irukera said customers had accused the operators of violating their privacy in their debt recovery drive, following which his agency began investigating the allegations since 2020. He ascribed the rise in patronage of online lenders to the COVID-19 lockdown, saying: Sometime ago, when the country was on lockdown in 2020 due to the pandemic, we started seeing the rise in money lenders. Because there was lockdown due to the pandemic, people needed small, easy loans, which is understandable. But over a period of time, people started complaining about the malpractices of the lenders, so we started tracking it.

The FCCPC boss identified two major malpractices by affected online lenders. The two key things that were subjects of concern were what seems to be the ˜naming and shaming violation of peoples privacy with respect to how these lenders recover their loans. Secondly, the interest rate seems to be a violation of the ethics on how lending is done, he said, adding that the commission set out to interrogate the charges and eventually found the lenders guilty. The FCCPC uncovered other lapses in the financial operators. Many of them, according to Irukera, had no fixed address to which they could be traced and were only operating online. Besides, some of the loan firms were neither Nigerian companies nor were they registered in the country. We found out that most of these companies operate from the same place. We also found out that many of them are actually operated by the same person. They are not Nigerian companies, they dont have an address in Nigeria and they are not registered in Nigeria with the Corporate Affairs Commission, and they do not have any licence to do their business, the consumer protector said. It was upon such discovery that the commission wrote app giants, Apple and Google, and requested them to suspend the operations of the online lenders; it as well secured a court order to shut down those with purported offices, among other measures. Irukera noted, though, that not all digital lenders were involved in the sharp practices.

We hold that government has taken a good lead in cleaning the Augean stable. It is now for prospective customers of digital lenders to ensure they restrict themselves to approved operators that can be easily tracked and sanctioned in the event of breaches of operational rules. Towards this end, the FCCPC needs to better publicise the approved loan apps. But this should also be a wake-up call to banking regulators to make the formal channels of credit better accessible to down-the-line compatriots who also need lifelines every now and then for their operations and survival.

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