Loan sharks: Nigerians lament high interest rates charged by loan apps

By Tumininu Ojelabi Hassan

Desperate Nigerians have decried the ridiculously high interest rates loan apps charge on their loans with a short repayment duration ranging from seven days to 28 days.

Nigerians are devising other means of survival as a result of the rising through short term credit, unfortunately some of these individuals got trapped in the web of exploitative loan apps, who leverage on their desperation to resolve urgent financial problems.

These predatory digital money lenders disguise as platforms, where you can access quick loans with no collateral except provision of bank verification number (BVN), name, request to take pictures and video recording, access to location, contact, media and files on device.

Some of the issues raised by customers of these loans apps ranged from exploitation, illegal deduction of funds from their accounts, to intentional delay in confirmation of loan repayment and defamatory messages, incessant phone calls by their recovery agents, who also deliberately reach out to contacts on the phone of the victim, claiming that they were included as an emergency contact in a case where a customer defaults in the repayment of their loans.

Based on interactions with customers, business owners borrow from these loan apps because that is the only available option. According to them, the process of applying for loans with low interest rates at traditional banks was too rigid and didn’t encourage them to apply for loans.

Aside from this, despite having a good credit history, their several attempts to receive loans from banks was met with disappointments as the banks claimed they weren’t qualified to receive a loan. On the other hand, digital money lenders approved their loans within minutes and disbursement was done within few minutes.

Kamor, a businessman shared his experience with a loan app after having to pay N12,000 interest on a N40,000 loan.

“I took a loan of N40,000 from Swiftkash, N12,000 interest was deducted upfront, which accounts for 30 percent of the loan amount while N28,000 was disbursed into my account. My repayment day was the 14th day. I made a payment of N30,000 on the due date, meaning I had N10,000 outstanding balance.

“The next morning, I received a call from someone, who told me the recovery agent of the loan app called her that I was owing them money. They also told her, they spoke to me but I refused to repay the loan. As at this time, they had not reached out to me and contrary to their claim, I had paid 75% of the loan amount.

“In less than one hour, other people started calling me concerning the same issue. I tried to call their phone number, it wasn’t going through. Later, I received a call from them threatening me to pay my outstanding balance. I told the agent I had paid 75% (N30,000) of the money the previous day, which was the due date. I promised to pay the N10,000 balance before the day runs out.

“The agent kept on disturbing me with calls. Eventually, I paid the outstanding balance with an accrued late payment interest of N400. I regret borrowing from them, I have deleted the app and vowed never to use it,” he stated.

In Adaeze’s case, she took a loan of N57,000 from a loan app, which attracted about 36% (N20,768) interest rate for a period of 28 days. According to Adaeze, on the 28th day she was to pay back N77,768 something happened.

“If I had another option I will never borrow money from these loan apps again.

“Their interest rate is killing. Why would your interest rate be 36% on a 28-day loan? This is clear extortion,” she complained bitterly.

Babawale Auspicious, called out Xcross cash via his twitter page due to unauthorized N16,000 deduction from his account for the repayment of a loan he didn’t apply for. Subsequently, Kayode, a ride-hailing driver complained about an authorized transaction on his account by Xcross cash.

“Two weeks ago, about N10,200 was debited from my account by Xcross cash. Before then, I had never heard of the name Xcross cash, neither did I apply for any loan from then. How they had access to my account is still a mystery to me because I do not have their app on my phone. However, I have gone to the bank to lodge a complaint, the issue has been escalated and investigation is ongoing,” he said.

Below are some of the defamatory messages and threats some digital money lenders send to customers, who have defaulted and their contacts.

“GOOD MORNING

KINDLY REACH OUT TO ….(Customer’s name and Telephone number) HE TOOK THE SUM OF 101,855NAIRA FROM QUICKCREDIT LOAN APP AND THIS USELESS BASTARD HAS BLUNTLY REFUSED TO PAY BACK. HE IS A CHRONIC DEBTOR AND FRAUDSTER I WILL ADVICE YOU TO SEIZE ANY FINANCIAL TRANSACTION YOU HAVE WITH HIM”

“Hello, If you don’t want to see the wrath of God and you don’t want to be having one problem or the other, please pay your debt before 5pm because you are blocking another person’s source of income and definitely your sources of income will be blocked too, so kindly pay your debt now..or you forever regret this act you taking.From Easycash”

Recall that on August 18, 2022, the Federal Competition & Consumer Protection Commission (FCCPC) on behalf of the Joint Regulatory and Enforcement Task Force (JETF) established the Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending 2022 as a measure to curb the excesses of predatory digital lenders.

The Commission noted a resurgence in the occurrence of prohibited loan recovery methods and practices in the past weeks. Based on their investigations and continuing surveillance, the vast majority of the resurging infringements are not by otherwise approved/listed DMLs approved to be on Google Playstore and other financial services providers.

The violating DMLs have resorted to the use of Android Package Kits (APK) file formats. The illegal DMLs provide links to consumers to visit unregistered websites using their Android devices/phones. In the course of that interaction, consumers’ private information that is otherwise protected and prohibited from access or download by DMLs or their apps is accessed and downloaded.

In response to the plight of predatory loan apps victims, FCCPC has now permanently delisted Sycamore Integrated Solutions Limited and Orange Loan and Purple Credit Limited, along with their respective apps – “Getloan” and “Camelloan”.

In addition, the Commission has entered an Order to Google Playstore and other payment and financial service providers, permanently prohibiting the provision of any services associated with digital lending to Sycamore Integrated Solutions Limited and Orange Loan and Purple Credit Limited.

The Commission reiterates that this revocation and action are permanent without option or opportunity of reconsideration, and the same consequence shall apply to all other violators as the Commission discovers them. In addition, all the information and evidence available with respect to these businesses will be transferred to law enforcement agencies and or any other relevant regulator (s).

In a statement released by the FCCPC, the commission disclosed its unwavering commitment to place DMLs that have refused to register under its guidelines on its watchlist and also pledged to continuously scrutinise these DMLs.

“The commission has also placed DMLs that have refused or failed to register under the Guidelines on its watchlist for strict surveillance and necessary action. The list of those DMLs will be made available on the Commission’s website. The Commission will continue to scrutinise listed DMLs and periodically update the list to ensure only businesses that consistently and completely comply with the spirit and intention of the regulatory framework are allowed to do business legally in Nigeria,” the statement noted.

FCCPC further advised customers of loan apps to exercise their discretion when applying for loans to avoid being victims of illegal loans and prohibited recovery practices.

“As such, the Commission again advises consumers to exercise restraint and discretion in selecting DMLs, and specifically recommends that consumers patronise only DMLs on the Commission’s approved list to diminish, if not eliminate being victims of illegal and prohibited lending and recovery practices, the commission warned.