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The Nigerian fintech space is growing exponentially, attracting the attention of both foreign and local investors and drawing new entrants into the diverse sub-sectors within the ecosystem. A good number of them have struck gold offering uncollateralized loan facilities to Nigerians albeit at eye-popping interest rates. Of this cohort, it would appear as if some have met and agreed to come down hard on defaulters, resorting to unbelievably desperate measures to recover loan facilities obtained from their apps.
Findings made by Nairametrics show that a number of these loan app operators now send embarrassing short messages service (SMS) and WhatsApp messages to the close contacts of their loan defaulters with the intention of shaming the defaulters, tagging them with terms like ‘criminal,’ ‘fraudster,’ and ‘terrible debtor’ among others.
In some cases, the full names, phone numbers and pictures of the alleged loan defaulters are shared with their contacts like religious leaders, members of churches and mosques, close friends, bosses, colleagues and family members.
Read: NITDA, FCCPC to sanction money lending fintechs for abuse of customers’ data privacy
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Victims recount their experiences
A paint manufacturer who introduced himself to Nairametrics as Adewunmi explained that he took a loan of N100,000 from one of the Fintech firms in Nigeria (Sokoloan) to deliver his products to a client. According to him, he defaulted for one week but had called the app’s staff four days before his repayment was due to explain that he would be unable to meet up with the repayment schedule on the said date.
To Adewunmi’s surprise, his Pastor called him three days after he had repaid the loan and requested to see him urgently on a Friday evening.
“He called me into his house asking me questions on why I obtained a loan from a company and refused to pay as at when due. I was blank for some minutes before I told him I had repaid the fintech firm,” Adewunmi narrated.
“That is not true,” the pastor responded. “A member of the church and the Head of Department of the Prayer Champions called me this evening that the bank sent the same message to them calling you a fraudster and a cheat,” he said.
Read: CBN gives banks approval to debit bank accounts of chronic loan defaulters starting August 1
Adewumi recalls being flabbergasted at what his pastor narrated. “I showed him the proof of my payment and the response I got from the firm as an acknowledgement before he believed me. From that day, I made up my mind never to obtain a loan from any fintech firm again,” he stated painfully.
The SMS Sokoloan sent to Adewunmi’s contacts read:
“This is to inform the general public that Mr Adewunmi *** with telephone *** is a chronic debtor and a fraudster. He is on the run after duping a lending money company. You are advised to stay clear from him.”
Stella is another victim of the menace. In her case, she defaulted on a loan facility obtained from another fintech firm in Ibadan for one month in October 2020. According to the former staff of one of the local airlines in the country, she could not pay up because she lost her job a month before repayment was due.
Read: CBN may publish names of agric fund defaulters, risk 5-year jail term for diversion
“I had planned to refund the credit facility but when the unexpected happened, all my plans went south. I reached out to a designated staff of the loan app operator and pleaded for an extension of three months, to which the staff agreed.
“But I was shocked a week later when a friend I have not seen for five years called me, asking questions about my welfare and whether I was affected by the lockdown. I didn’t suspect anything until he told me he got a WhatsApp message from the fintech, alerting him to avoid doing business with me that I am a loan defaulter.
“When he forwarded the message to me, I knew it that I had passed my bounds and decided never to do that again. My friend sent the money to me and I repaid the loan. Obviously, the plan was to embarrass and disgrace me, so I would go to any extent to repay them. But what if I fell into depression and lost my sanity, how would that have made the fintech any better?” she recounted.
Another victim, Adeolu (name changed) recounted his experience to Nairametrics. In his case, he had obtained a loan of less than N30,000 with an interest of nearly 25% for a 15-day period. The repayment was due on a Wednesday and a staff of Kash Kash, the loan firm, called him to notify him that repayment was due.
Read: Interest rates of some loan apps in Nigeria
Adeolu informed the staff that his invoices to clients were being delayed and requested that the fintech firm give him until Friday, which was the last day of the month, to repay. The staff agreed. The very next day, another staff of the firm put a call through to his wife, a lawyer, threatening her that the company was going to involve the police in the matter.
“My wife was embarrassed, especially since I had not told her of the loan. She asked about the amount and the repayment date. When she realised that the loan was overdue by less than 24 hours, she went berserk and gave the staff a dress-down. She also threatened to report their illegal action in contacting her to NITDA.
“The staff immediately became docile and explained that I had asked to be given until Friday to repay the loan. My wife assured her that there would be no further extension to the loan and the company backed off. Apparently, they are afraid of the regulators but they take advantage of the fact that most people are ignorant of the existence of NITDA and even the oversight functions of the CBN in regulating the activities of these fintechs.
“These agencies need to do more to help Nigerians know that they exist and are functional,” Adeolu said.
A Nairametrics analyst also shared his experience when a strange number sent a WhatsApp message to him (with a picture) that one Ms Damilola had defaulted in paying a loan obtained from the app.
The message read thus:
“FINAL WARNING!!! Good day, be informed Ms Damilola with phone number 081303xxxxx Is a defaulter who took LOAN and has vehemently refused to pay. Hence her actions has proven to be SUSPICIOUS. Kindly reach her and compel her to pay up her loan as the company is taking unfriendly & drastic measures including reporting her debt to CREDIT BUREAU as this is an ALLEGEDLY FRAUDULENT ACT. NOTE: You are getting this message because she gave us your number as EMERGENCY CONTACT.”
The shocking news here is that our analyst does not know the lady in question and the name of the fintech was not mentioned either.
According to the sender, the loan defaulter had given out our analyst’s number as an emergency contact person. But one would have expected the fintech to verify the information the loan seeker dropped before taking such steps.
There are countless complaints on the pages of many of these loan apps on the Google PlayStore showing the deep grief caused by those messages.
What NITDA is saying about debt collection strategy
The National Information and Technology Development Agency (NITDA) has described the debt recovery strategy adopted by some of these fintechs as a data-sharing breach.
The agency frowned at such practices and emphasized that no fintech firm is allowed to share its customers’ data without due process.
This was made known in a press release by NITDA’s spokesperson, Hadiza Umah.
To curb the trend, NITDA imposed a sanction of N10 million on an online lending platform, Soko Lending Company Limited (Sokoloan), for data privacy invasion.
According to NITDA, it received a series of complaints against the company, including ‘unauthorized disclosures, failure to protect customers’ personal data, and defamation of character.
How fintechs access customers’ data
NITDA said its investigations showed that Sokoloan grants its customers uncollateralized loans and requires a loanee to download its mobile application on their phone and activate a direct debit in the company’s favour which grants the application access to the loanee’s phone contacts.
“According to the complainants, when he failed to meet up with his repayment obligations due to insufficient credit in his account on the date the direct debit was to take effect, the company unilaterally sent privacy-invading messages to the complainant’s contacts,” NITDA said.
An IT expert, Tolulope Ogundipe, told Nairametrics that some of the fintechs embed trackers that share data with third parties inside their mobile application without providing users information about it or using the appropriate lawful basis.
He said, “Some of them are guilty of unwillingness to cooperate with the Data Protection Authority, contrary to Article 3.1 (1) of Data Protection Implementation Framework; and non-filing of NDPR Audit reports through a licensed Data Protection Compliance Organisation (DPCO), contrary to Article 4.1(7) of the NDPR.
“I expect NITDA to ensure all of them are brought to book, as they will curb others in the industry. The challenge is that most of their victims won’t report their cases to appropriate quarters, as they suffer in silence due to ignorance.”
Bottomline
While NITDA is expected to investigate other erring fintechs and protect innocent Nigerians, it is important to note that the agency can only work on petitions/complaints filed to it by victims.
The loan defaulters that have experienced or are experiencing this illegal form of harassment are expected to report to NITDA for appropriate steps to be taken.
They keep saying they work for Chinese firm that asked them to embarrass their fellow citizen. I have a victim before. I think their should be a small court they can sue their defaulters to and sanction the defaulters to loose something that can replace the money if not paid back so so time, one it will create a value chain and employment and no one who is not capable of repayment will go for their loan again, a crazy interest loan, 30% to 50% weekly interest… they’re funded by criminals and they are criminals as well
knowledge is power I think I know my right now. the same sokolending through the app gocash has harassed me each time I take a loan from them. let’s my loan is expiring today instead of sending reminder they will be sending threatening messages with calls with all manners of unfriendly language. thanks to nairametrics giving me this knowledge.
Better to stop collecting Loans you will not be able to pay.
Some of those companies are suffering because people collect Loan and refuse to pay, if Nigeria system always protect criminals, How do we protect good people. They Loose money year in year out to defaulters
That is not true..they are not loosing any money. Do you know how unreasonable their interest is? Do you know how much they make from Nigerians on daily basis? Even after the due date, do you know the interest on the overdue amount is even higher than the first one? Its nobody’s wish to default but there are times that things won’t go as planned. So don’t blame citizens for patronising them. Afterall, they are not giving us money for free. If they really want to do this business, they should learn from Branch and Fairmoney
God bless you. Branch na baba
Sokoloan, Rock Financials Limited (Add monkey, Aimloan, Anyloan), 9 credit, Nairaplus, Xcredit etc. are all guilty of this dastardly act.
Kudos to NITDA on the 10million naira fine imposed on Sokoloan however, the same Sokoloan is still breaching the privacy law with wanton impunity.
I feel NITDA can do much more to these terrible companies.
The fintech industry in Nigeria needs to be heavily regulated.
And to top it all, some of these companies are owned by Chinese and they encourage all these terrible acts in Nigeria.
Sokoloan did the same thing to me, I almost committed suicide all because I defaulted just fr a week
U forgot to mention the ALMIGHTY LCREDIT these people are children of Lucifer
I swear…
Kudos to Nairametrics for publishing this?Am also a victim. My loan was due on Sunday and one of their staff called me very early on Monday morning which I explained to him I was stranded somewhere and I promised to pay my loan on Tuesday which he agreed and I even thanked him for that. To my surprise, I was just receiving calls from friends, relatives in fact from someone have not seen or talked to for so many years that they received a message from 9ja cash(sokolending company) that am a criminal, fraudsters calling me all sorts of names?? including my pictures. They even sent it today again. Anyone with NITDA contacts in Ado Ekiti should please kindly assist me on it. I need to report them as well because have been embarrassed, some of my customers have lost trust in me??
Nigerians will always be Nigerians. The same so called fintech guys are no different from the everyday hustlers you see in the streets. We are generally mannerless and unruly. Nigerians generally don’t respect confidentiality and it’s very bad. Me, I would never go to borrow from those guys. I value my ego and self-worth.
People don’t go to them while rich but in desperation
Am a victim as well they spoil my relationship with my family. I was been regarded inresponsible son. This people are very wicked.
About 800 contacts from my phone received that embarrassing messages.
800?! I feel for you o!
I’m also a victim of this disrespectful act….. like 300plus my contacts received the message…..right now I’m not thinking of repaying all I’m trying to do do save my face from the shame
That was how i was disgrace also, it happens that i went to NYSC in that process, my phone fell on the parade ground and the screen went off and i was suppose to pay their loan the next day but unfortunately i couldn’t pay because of my bad screen, so after a week my sister brought me a Nokia touch light pending till when i get home. But the most annoying part is that this loan app ( SOKOLOAN) started sending messages to all my contacts and broadcast on WhatsApp, Facebook, Instagram and my friends started calling me to ask what happen. The most painful part is they send it to my father which we are not in good times. I felt embarrassed and promise myself never to lend money from any loan app again.
This is pure madness. One of them sent me a message that a a friend I have known for ages is a fraudster, and I responded by insulting them and told them never to contact me again. What madness,
It total madness, after the whole shame and disgrace. They still expect u to pay. I swear if I was a victim I never return their money. Not after spoiling my name.
The same harassing message was sent to me on two different instances when i reach out to my friends there told me it was just a #5,500 loan and he’s about to balance them just the next day. They and their money are evil manipulation in motion. There should be strick fine to be imposed on them.
This people are something els I can believe my eyes when sokoloan or what ever is there fucking name sent me such a message on my whatzap line that my sister in law is a fraud star and criminal I was furious and helpless because of 20k with interest of 50%, I think government should come the the aids of Nigerias, I always ask them who is more criminal among the lender and the person that default the loan, you give 20k loan and want 45k in return