The rise in the use of online lending apps in Nigeria has recently attracted the attention of the Federal Competition and Consumer Protection Commission (FCCPC). In a statement, the Acting Executive Director of the FCCPC, Dr. Adamu Abdullahi, highlighted the growing number of violations committed by these lending apps, while noting that more and more Nigerians are turning to them to reach both ends during this difficult time.
The FCCPC recognizes the increased demand for loans during this time of year, leading to an increased risk of default due to the large number of people involved and typical cash flow constraints. However, the FCCPC says the solution cannot be through breaking the law or using unethical collection methods. Therefore, it is intensifying its monitoring efforts and adopting a zero-tolerance policy towards any consumer exploitation or abusive behavior, whether in the calculation of balances, enforcement of unpaid loans or recovery process.
The commission also observes that, despite the regulations in force, some loan applications resort to methods of harassment and intimidation towards their customers in order to recover debts. This situation has led to tensions between the government, consumers and online lending apps over how digital lenders handle their customers’ defaults.
Working with key entities such as Google, the Independent Commission Against Corruption and Other Related Offenses (ICPC), the Central Bank of Nigeria (CBN), the Economic and Financial Commission of Nigeria (EFCC) and the Nigerian Communications Commission (NCC), the FCCPC established an interim registration framework for digital lenders. Through this collaboration, many defaulted loan apps were taken down as they were accused of illegally accessing customer information, such as their phone contacts and photos, which they used to defame customers. This action reduced harassment and defamatory messages sent to customers by digital money lenders by 80% last year.
Dr. Abdullahi also said the FCCPC will begin discussions with approved lending applications regarding the development of a more robust compliance framework, including possible additional requirements, as well as mechanisms for previously blacklisted applications .
It is therefore essential for users of online lending applications to familiarize themselves with their rights as consumers and to report any abuse or abusive behavior to the FCCPC.