DIGITAL rights experts have criticised the Nigerian Federal Government for allegedly failing to protect Nigerians from the activities of loan sharks.

Loan sharks or loan apps are mobile tools that give instant loans, with no collateral needed. They do this digitally, without any physical meeting. They have, however, come under intense criticisms over their manner of hounding borrowers who defaulted on loans.

The experts, speaking in a panel session of the Digital Rights and Inclusion Forum (DRIF) 2022 at Radisson Blu Hotel, Ikeja, Lagos, on April 27, 2022, said if these problems were not timely solved, Nigeria could face more privacy problems.

A researcher and co-founder at Tech Hive Advisory, Ridwan Oloyede, said the space of digital lending had become “a complete mess” as loan sharks had succeeded in blackmailing people from low-income households

Oloyede said, “If we dabble into digital lending, that is a mess completely. Yes, there are responsible lenders, I have to say that. Last year, we put out a report where we looked at over 23 of them across data protection, cyber security and consumer protection. Today, a greater number of us receive messages from these loan sharks that someone is dead because someone borrowed money. Other times, they send you a message that someone has stolen and the person is on the run, or that the person is a ritualist.”

He said these apps utilised the social conditioning of words like ritualist and thief to change perceptions about an individual. He explained a concept known as deceptive design, which he said the loan apps used in manipulating user behaviour.

“This is a situation where you want to book a hotel for travel and they are telling you that 50 people already checked in, or there are three seats or rooms left to book, but it is not true. Some even give positive comments about apps on Google Play Store. Many people fall victim due to nice reviews. Most of them are bogus claims,” he explained.

A programmes officer at Global Rights, Moyosoreoluwa Oluwasegun, said the nation had failed to get its act together “and that is the reason why these loan apps continue to operate with impunity.”

Oluwasegun said, “The government announced a decision to delist some of the apps from Play Store, but what we find happening is that there are some loan apps that the government is unaware of. What we have now is that some of these loan apps reach out to you via Whatsapp due to gaining access to people’s information, baiting you to download the apps and borrow money.”

He noted that the companies were targeting people at the bottom of the pyramid, whom he described as not having enough to live by.

“Some of these people are poor and are in dire need of money, like the market seller or a student who doesn’t have access to these resources like the middle class do. Part of the problem is that they don’t understand what kind of data they are giving away when they sign on to these apps. We have a really big problem that would take a couple of years to sort out.”

He urged for more education regarding these issues, charging private institutions, the civil society and individuals to work on amplifying the message on digital rights due to what he alleged was government’s ineptitude.

The Head of Privacy Policy, Africa, Middle East and Turkey of Meta, (Facebook), Dr Ololade Shyllon, assured participants at the event that the social media app would not sell out user information.

Shyllon explained that even when asked by the government, Meta disclosed information according to its terms of service.

An ICIR report revealed that this act of shaming people publicly clearly violates Article 2.2 of the Nigeria Data Protection Regulation (NDPR), which bans illegal data sharing with third parties without a legal basis.

In the report, The ICIR reviewed the terms of service of some loan apps hosted on Google Play Store. These included NairaPlus, EasyCredit, TrueNaira, GoCash, CashLion, FairMoney and LCredit.

They all failed to disclose to users downloading the apps that their rights of access to users’ contact lists would be shared with third parties if they defaulted. This did not conform to Google Play Store’s policies.

The updated data privacy policy on the Google Play Store stipulates that apps that offer financial services on its platform should disclose to users what it intends to use their personal information for.

In August 2021, the National Information and Technology Development Agency (NITDA) fined Soko Lending Company N10 million for sending threatening messages to borrowers, which it said constituted a privacy invasion.

Immediately after that, the Federal Competition and Consumer Protection Commission (FCCPC), the Central Bank of Nigeria (CBN) and the Economic and Financial Crimes Commission (EFCC) issued a statement on plans to commence investigations into the illegal practices of digital money lenders in the country.

In March 2022, the Vice-Chairman of the Joint Task Force of the FCCPC, Babatunde Irukera, said the commission had frozen no fewer than 30 bank accounts operated by illegal loan organisations.

However, the Central Bank Governor, Godwin Emefiele, maintained that despite the recent success in shutting down loan sharks, identifying these companies remained a challenge because of the underground nature of the business.

Joseph OLAOLUWA

Author Page

Experienced Business reporter seeking the truth and upholding justice. Covered capital markets, aviation, maritime, road and rail, as well as economy. Email tips to jolaoluwa@icirnigeria.org. Follow on Twitter @theminentmuyiwa and on Instagram @Hollumuyiwah.