Have you ever been completely hard up with no penny to your name such that the only option you have to make is to seek help from nobody else but a sworn enemy?
Well, this short anecdote written by The Nation’s Ibrahim Apekhade Yusuf and Jill Okeke capture the agonising stories of victims of shylock mobile loan companies in Nigeria and becomes apposite in describing the Hobson choice Nigerians like Adewale Aremu (not real name) are confronted with on a daily basis as they’re forced by circumstances to borrow money from shylock moneylenders who literally seek a pound of flesh from them in exchange for a loan.
Enter the world of shylock mobile moneylenders
It is no longer news that many Nigerians have long complained bitterly about the illegal and heinous tactics employed by loan sharks. They include outright lies against defaulting consumers, invasion of their privacy and other rights violation.
Loan sharks have a history of exploiting their customers’ personal information, compromising their privacy and sharing it with those who were not engaged in the original agreement.
Furthermore, these loan app operators send embarrassing short messaging service (SMS) and WhatsApp messages to the loan defaulters’ close contacts with the purpose of shaming the defaulters.
A business law expert, Chinenye Ajayi, who spoke on the matter, said the act of accessing borrowers’ contact lists for the purpose of public shaming them is unlawful because the borrowers didn’t expressly consent to the invasion of their privacy for that purpose.
“Consequently, sending messages to contacts of the applicant can be considered as an invasion of privacy if the loan applicant does not expressly consent to the specific use of that information in the manner it was used. The widely couched clauses can arguably be regarded as misrepresentation of facts as it is not specific. On this basis, the loan applicant may institute an action for an infringement of his or her right to privacy,” noted the lawyer.
Echoing similar sentiments, Pascal Muonye, a security expert while responding to treats posed by loan sharks to third parties said one way to get a loan shark off your back when the debt he’s after is a relative’s and nothing to do with you is to first report the company or individuals in question to the police. “All you need to do is to name the loan shark. Tell the police. Tell the loan shark you did that. Firmly tell him to leave you alone. A loan shark is not likely to go as far to collect from you as he would from the person who took out the loan. He’s banking on your fear of the loan shark or your embarrassment to be related to the debtor to encourage you to pay this person’s debt.”
Loan sharks get their name because they prey on the financially weak. This includes the elderly, low-income, minorities and those with bad credit. Loan sharks operate in upscale neighbourhoods, too, but these loan sharks are less visible. Most loan sharks set up actual shops in areas where the economic situation is toughest, operating in the open next to facilities like liquor stores and casinos. By setting themselves up in these “pools” of need, their hope is that catching someone who needs money will be easier.
Some businesses operate similar to loan sharks in the way they charge interest and fees, although they don’t necessarily use intimidation tactics. A good example is payday loan businesses. These businesses give you a loan for a postdated check, but you end up paying as much as 400 percent in interest.
Getting a loan from the bank when you have bad credit can be impossible but not with a private lender as long as you can prove the loan would yield profit and the duration for repayment is agreed on, you can probably get a loan of any amount from a private lender.
All attempts to get the officials of some of these loan app companies to react to series of allegations against them proved abortive as most of them were yet to respond as of press time.
An email sent to most of them detailing the atrocities committed by their agents and staff were rebuffed.
However, a similar email to the apex regulatory body of the bank, the CBN, shed more lights on the activities of these loan sharks.
A letter from the desk of the Consumer Protection Department (CPD) sent to The Nation and signed by Aliyu, Ibrahim Tunde, Muhammad, Hamza Hassan and Kamba, Sulaiman Sani disclosed that some of the loan app companies are not register3ed by the CBN.
In the mail which reads in part, the CBN officials said it “observed that Sokoloan/Soko lending company ltd is not a licensed financial institution under the regulatory purview of the CBN. In view of the above, you are hereby advised to report the matter to the appropriate institution/ regulatory agency for investigation.”
Avalanche of petitions at FCCPC
Investigation by The Nation revealed that many victims of mobile moneylenders have had to send petitions arising from intimidation to the Federal Competition and Consumer Protection Commission [FCCPC].
At the last count, an inside source at the FCCPC revealed that over 450 complaints bordering on harassment, intimidation, violations of rights and privacy from customers of microfinance banks and other allied financial institutions.
One of the documents sighted by our correspondent showed that some of the lending houses indicted includes Spectrum, Lapo, Accion, Palmcredit, Next, AB, Wonderland, Zedance, Groomig Centre, Janiqu# My friend, Soko Loan, Ncash, 9credit, Gocash, Kashkash, Easycredit, Fastmoney, Xcredit, BorrowNow, amongst others.
One of the documents which read in part noted that “With respect to specific issues observed from the complaint, the Commission identified defamation, abuse of consumer rights to privacy, high compounded interest, unfair business tactics/harassment with respect to debt collection and violations of money lending regulations and framework.”
Mrs. Roselyn Njoku, said She has not known any peace since She borrowed N100,000.00 from Lapo micro finance last year. “Since then, I have paid them over N200,000, and they are claiming I am still owing them. They did not explain compound interest to me. I starve myself and family to make sure I pay back the agreed monthly N10,00O but all my efforts to clear the debt does not seem to yield any result”.
The Seamstress alleged that the officials have repeatedly been to her shop demanding their money harshly even in front of her neighbors and customers. “Sometimes they come here threatening to lock up my shop if I do not pay back a minimum of N20,000 monthly and my question is, what of all the money I have already paid back and their answer is that, it is only the interest I have been servicing.”
Crying for help, “I am at my wits end. I have gone to their office but the manager shouted me down. From my own calculations, I am no more owing them but according to them am still indebted to them to the tune of N35,000.”
Speaking, embittered Ladipo Lafia who is a victim blamed commercial banks for forcing customers to patronize lending houses. He said it was the flaws and loop holes in the policies of commercial banks that the micro finance houses took advantage of.
“Most commercial banks are so stringent with their policies on loans that an average Nigerian or civil servant may find it difficult to meet their conditions. Unlike commercial banks, majority of these lending houses will not demand for collateral before giving you loan. Their loans are easier to access than loans from commercial banks. Majority of the people that approach Micro finance houses are those without collateral”.
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