Image Credit: Market forces Africa
Money is an essential tool for meeting our needs.
However, when funds are scarce, many turn to loans to cover immediate expenses, whether it’s for the payment of college tuition or funding a new project. Traditional sources like banks, financing companies, and cooperatives have been common choices, but recently, digital loan providers, also known as Digital Money Lenders (DMLs), have emerged as a convenient alternative. In today’s challenging economic climate, it is crucial to exercise caution, especially for students facing difficulties in paying their school fees. If you’re considering borrowing money, don’t act in desperation, as loans with interest rates in the double digits can lead to severe financial problems during repayment.
Digital moneylenders have become abundant, but their operational methods demand a cautious approach. These online platforms typically offer short-term loans. However, if a borrower defaults due to circumstances beyond his control, some digital money lenders resort to unprofessional and illegal tactics for debt recovery. They often resort to informing acquaintances about the borrower’s indebtedness, making threats, and resorting to name-calling.
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Many individuals have suffered humiliation and distress due to these tactics. For instance, Michael Davies, a resident of Ijaiye-Ojokoro in Lagos State, shared his harrowing experience with a digital moneylender. Michael borrowed ₦30,000 but struggled to pay the remaining ₦10,000 after repaying ₦20,000. This led to incessant calls, insults, and even the digital money lender sending his obituary to some of his friends in a bid to pressure him into repayment. Michael described this period as devastating, causing both psychological and life-threatening distress.
“I started receiving incessant calls and insults from some of their workers. It got to a stage when they started sending out massages to my friends across the country. Many of them called to inform me, why others did not. At one point, the digital money lenders sent my obituary to some of my friends intending to get them to pay on my behalf. That period was devastating for me as I passed through a psychological and life-taking period.” Micheal said. Similarly, James Rowland from Ogba in Lagos vowed never to borrow from digital moneylenders after experiencing intense pressure and embarrassment when he borrowed ₦40,000 and struggled to repay due to work-related delays.
“I have decided not to get loans from some of these digital money lenders as the pressure and embarrassment one passes through to get their money paid is harrowing. I passed through a period of turmoil when a brother told me about several messages the DML sent to him when I obtained a N40,000 loan from them. Though I defaulted on paying after I paid N20,000, it was not that I didn’t want to pay. It was because I was being owed in my place of work and I could not find any funds to repay the loan. Fortunately, for me, my sister got me another money to repay the loan. Since that day I have vowed never to get any loan from these digital money lenders.”
A man who prefers anonymity also disclosed to Black Campus Magazine that a neighbour’s wife called him to help her as a guarantor for a soft loan, she wanted to collect to boost her petty trading business.
“On a spot, I was quite sceptical about the whole thing. On second thought, I decided to go because of our relationship at the community level. When we started the process, it became obvious that I’d have issues to contend with. Long story short., I stood as a guarantor for the loan she took and almost immediately, I lost my peace. The creditors, just when she had almost rounded off paying the loan, kept calling me and reminding me that I would have to pay the balance if anything went wrong. “More irritating was the lack of courtesy and threats-like reminders. I was pissed, to say the least. And guess what? The balance wasn’t even up to N10k. I am sure if it had been in the six figures vicinity, they’d have snuffed life out of me.”
Gbadebo (not his real name), a student, applied for a loan to cover his school fees, unfortunately, he was unable to meet the repayment deadline. The digital money lender resorted to sending embarrassing messages to his contacts, pushing Gbadebo to the brink of suicide. Fortunately, his friends noticed his unusual behaviour and intervened.
In another incident, a digital moneylender provided a paltry ₦1,000 loan to a student who needed to recharge his phone to make an urgent call. He later paid back ₦500 promptly. However, weeks later, the lender sent a threatening message about taking legal steps and informing the borrower’s contacts about his debt.
Tony Iji, a publisher of Top 10 Magazine, recounted his ordeal with the Easybuy mobile instalment business. He stood as a guarantor for one of his employees who was making instalment payments for a purchased item.
Despite diligent payments, a dispute arose when the lender claimed non-receipt of the final payment. This led to the lender informing Tony’s contacts, causing embarrassment and frustration.
“I have been deducting the money from the employee’s salary and crediting them accordingly. After making the final payment, I sent the notification to them. They later called that the money was not reflected in their account. By the time I woke up the following day, the money had been reversed to me. I immediately made several calls to them, which were not picked up. To my surprise, they had made several calls to my contacts to report the issue. The lady making the calls was so rude as if she was trained in the art of rudeness. When I got to them, they said I should not pay into the bank account that was known to us and provided another account number. Immediately after I paid, they sent me a receipt of acknowledgement. My wife was among the
contacts that were called. She was so angry with me for allowing myself to be dragged into this arrangement,” he said.
Access to Contacts
It’s essential to understand how digital money lenders acquire contacts to send threatening messages. When individuals apply for loans, these lenders gather information, including National Identification Numbers (NIN), Bank Verification Numbers (BVN), addresses, and other financial details through loan apps downloaded on their phones. This data may later be used to pressure borrowers in case of defaults. Additionally, digital moneylenders often request permission to access a borrower’s phone when downloading the loan app. Granting this permission gives lenders access to contacts, messages, and the phone’s camera, providing them with more leverage for debt collection.
Repercussions of Blackmail
Blackmail by digital money lenders has subjected numerous
victims to physical and psychological pressure, impacting their well-being.
Many victims have contemplated suicide to escape embarrassment and harassment from friends and family who also receive threatening messages from these lenders.
Due to the relentless threats from digital money lenders, some people are coerced into paying debts they don’t owe. The damaged reputation of those falsely accused can be challenging to repair. Complaints from different quarters about the wicked activities of some of the digital moneylenders necessitated the Federal Government, through the Federal Competition and Consumer Protection Commission (FCCPC) to seek the cooperation of Google to delist digital money lenders from Playstore for violations of its guidelines. In April 2023, Google took steps to address this issue by banning loan apps from accessing phone contacts without permission. Users can now revoke this permission in their phone’s settings. This move aims to limit digital money lenders’ ability to contact a borrower’s contacts.
According to FCCPC, these digital money lenders were either operating without regulatory approval or in violation of the Limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending, 2022 (Guidelines). Only those digital moneylenders who were thoroughly scrutinised by the appropriate authority and with evidence of written approval were allowed to be on Playstore.
To sanitise the system, the Federal Government of Nigeria, some months back delisted 18 Digital Money Lending companies. Also, the government asked Google to remove the 18 Digital Money Lending companies from its PlayStore and other platforms. The list of DMLs affected are Getloan, Joy Cash-Loan Up to 1,000,000, Camelloan, Cashlawn, Nairaloan, Eaglecash, Moneytree Finance Made Easy, Luckyloan Personal Loan, Cashme, Easynaira, Swiftcash, Crediting, Swiftkash, Hen Credit loan, Nut loan, Cash door, Cashpal, Nairaeasy gist loan. It will be recalled that the FCCPC had delisted three DMLs for invading customers’ privacy in the name of loan recovery.
The Way Out
Analysts have said in many fora that while individuals do request loans with the intention of not paying them back, such individuals should also be punished to stop the tide.
They advise victims of blackmail to hesitate in responding to intimidating messages or paying any money when they know they do not owe but should approach the lender or financial institution where the fake loan originated. Analysts also recommend that such victims report to the police and seek legal advice on steps to take; to protect personal information and financial accounts, adding that it is advisable not to divulge personal information like BVN and other biodata.
According to Hi-Tech, on no account should anyone download any financial app unless such a person can recognize it as coming from a secure source.
International Centre for Investigative Reporting (ICIR) in their findings discovered that most of the online loan apps are missing on the Corporate Affairs Commission (CAC), hence investigating to know if the digital loan is backed by a physical bank or not, and find out if it is duly registered.
While it is advisable to desist from giving extra permission like contacts, and location to any
financial app, individuals also need to go through genuine channels to request a loan. When it becomes necessary to get a loan, borrow the amount that will be easy for you to refund, and use only loan apps that are known in the industry, introduced by a friend who can vouch for their reliability to avoid blackmail.
Conclusion:
Analysts say digital money lending has provided convenience but has given rise to unscrupulous practices. This they say, the government’s intervention, in collaboration with Google, aims to regulate the industry and protect borrowers from harassment. They advise individuals to remain vigilant, take precautions, and report suspicious activities to relevant authorities.
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