“I was receiving phone calls from a particular number for three consecutive days. Every day, they’ll call at night, at about 9pm to tell me about someone who took out a loan and had defaulted on payment and they were reaching out to me because he had used me as his guarantor.
“They also said something along the lines of reporting him to the credit bureau and threatened to report me too and that if I didn’t want to be blacklisted and embarrassed by the publication of my name across all media platforms, I should prevail on the person to repay the loan.
“I was confused and taken aback because I didn’t know the person they were talking about or when I stood as guarantor for him. Unfortunately, it was a pre-recorded voice call so I couldn’t ask any questions but I later checked the number on Truecaller App and it showed LCredit.”
This is the experience of Whitney Dennis with loan sharks, who have been inundating Nigerians with threatening phone calls lately, over loan issues they have no knowledge of.
The COVID-19 pandemic affected the livelihoods of not a few Nigerians with far reaching economic challenges.
Consequently, a lot of people had to turn to digital lenders for quick loans to meet financial challenges, especially as loans from traditional finance institutions are difficult to get and have a plethora of conditions to be met.
Even though the digital lenders charge higher interest, most loans are not collaterised and the process of accessing them simplified so they are very attractive to those seeking urgent funds.
However, while it may seem that the loans are easy to get and come with no price, Nigerians are beginning to realise that they come at a price.
Preying on the desperation and vulnerability of the loan seekers, the lenders give them conditions including allowing them access to their private information which they quickly give out, without thinking of the far reaching consequences.
Findings by 21st CENTURY CHRONICLE revealed that the digital lenders have devised unorthodox means of making loan defaulters pay back, which include sending embarrassing short messages service (SMS) and WhatsApp messages to telephone contacts of defaulters, such as religious leaders, colleagues, close friends, bosses, and family members, tagging them criminal, fraudster, among others. They also share the pictures of the alleged loan defaulters to their WhatsApp contacts.
All of these are done with the intention of shaming the alleged debtor into paying the debt and putting pressure on their supposed guarantors to make them pay, as they often threaten to embarrass the guarantors too.
By profiling and harassing those on the contact list of alleged loan defaulters, digital lending companies breach their privacy.
Giving insight into how the digital loan companies access data of debtors’ contacts, Godwin Mase (not real name), said he had used the services of one of them in the past and one of the condition one had to meet was for you to grant them access to your contacts, failing which the application cannot progress.
According to him, having assured him he was eligible for a loan of N100,000 to repay in two months, he went through the rigorous process of the online loan application, inputting personal, education and work details.
“I was also requested to provide copies of my bank card, BVN, to upload a two months’ bank statement and a valid National Identity Document. My personal photo was also captured by the app and security access to my phone was requested for my contacts, location, text messages, phone and call history which if not granted, the loan will not be approved.
“With no option, I did all they requested. At the end of it all, to my surprise, I was only given N10,000 to repay N14,800 in just 10 days, while requesting me to keep a good credit record for a chance to obtain a higher loan. Due to my desperation, I agreed and took the loan. The 10 days came much earlier than my pay day and I couldn’t gather enough to repay and the penalty fee which was very huge, started applying for each defaulted day, with constant threats of embarrassment from the lender.
“I pleaded for more time, but my request was declined and after three days, messages started going out to my phone contacts, deceiving them that I had used them as guarantor to obtain a loan, asking them to persuade me to repay or else be embarrassed,” he explained.
Mngusuun Asemakaha said she was taken aback when she received a WhatsApp message with the photo and other details of a woman, telling her she had used her as guarantor to collect a loan and defaulted so both of them were going to be embarrassed. She later realised the woman was an old client.
What the law says
Data is said to be one of the most valuable assets in the world today and considered the oil of the digital era. A lot of what happens on the internet rises and falls on data and nearly every transaction conducted online requires the release of some form of personal data.
Even though internet subscribers and social media users are required to provide personal data and some other information which may be considered sensitive to facilitate access and use of some of these platforms, this usually comes with guarantees from the service provider not to use the information for purposes other than that for which it is requested.
In Nigeria, the Nigeria Data Protection Regulation (NDPR) was issued in January 2019 pursuant to Section 6 (a,c) of the NITDA Act 2007, and is the extant national law on data protection in Nigeria.
It applies to public and private sector processing of personal data within and outside Nigeria and is aimed at protecting the right to privacy, creating the right environment for digital transactions, job creation and improving information management practices in Nigeria.
The country’s data privacy and data protection laws draw from the 1999 Constitution which, by virtue of section 37, protects the rights of citizens to their privacy and the privacy of their homes, correspondence, telephone conversations and telegraphic communication. Data privacy and protection are, therefore, extensions of citizen’s constitutional rights to privacy.
However, there have been flagrant breaches of these privacy regulations by digital lenders without recourse to what the law says.
Lawmaker weighs-in
A member of the House of Representatives, Akin Alabi, recently moved a motion to curtail the excesses of online lenders in the country.
Alabi, who represents Egbeda/Ona Ara Federal constituency, said the operations of the companies were outside the principles of fair and lawful processing of personal data as required under the Nigeria Data Protection Regulation and other relevant provisions on data protection in Nigeria.
He decried a situation where phone contacts of the debtors, who are in no way privy to or consented to any agreement, are besieged with unsolicited messages from loan providers in a bid to force the borrowers to pay
“…these tactics raise questions hinged mainly on privacy violation, intimidation, and harassment,” Alabi stated.
He, therefore, called on the Central Bank of Niger (CBN) to provide better regulation for these financial service providers, and the National Information Technology Development Agency (NITDA) to ensure strict
adherence to the Nigerian Data Protection Regulation by all online loan providers.
Regulators react
NITDA said it has entered a strategic partnership with the Federal Competition and Consumer Protection Commission (FCCPC) to address the increasing rates of data privacy abuse by money lending operators, particularly fintech.
According to NITDA, the impacted money loan companies have been exploiting their customers’ personal information, compromising their privacy, and sharing it with those who were not involved in the initial arrangement.
“The Agency has received over 40 petitions from members of the public on the personal data abuse of some lending companies. Our investigations led to the imposition of a Ten million naira (N10,000,000) fine and other administrative sanctions on Soko Lending Company. As an agency focused on using its mandate to empower Nigerians and make them active players in the digital economy, NITDA is very concerned about the worrisome effect the nefarious activities of the money lending companies is having on families, friends, and the society at large.”
The agency said it was worried about the effect the nefarious activities of the money lending companies on families, friends, and the society at large, as some of the complainants had contemplated suicide, indicating that the government needed to do more to protect vulnerable Nigerians.
NITDA reminded lenders that the underhand loan recovery tactics being deployed were in violation of the NDPR 2019.
Similarly, the FCCPC, CBN, Economic Financial Crimes Commission (EFCC) and the Independent Corrupt Practices Commission (ICPC) have commenced rights violation investigations into the money lending industry.
Chief Executive Officer of FCCPC, Babatunde Irekura, said continuing complaints about questionable repayment enforcement practices including public shaming and violations of privacy have led to significant and understandable consumer aggravation and dissatisfaction.
“Others are arbitrary, unjust, unreasonable, or exploitative interest rates and or loan balance calculations, harassment and failure of consumer feedback mechanisms, among others have caused consumer aggravation.
“Initial inquiries demonstrate that many of the purported lenders are not legally acceptably established or otherwise licensed by the appropriate authorities to engage in the services they ostensibly provide,” he stated, adding that the agency was working with NITDA.
