Loan Apps Go Gangsters, Send ‘Shame’ Messages to Close Contacts of Loan Defaults – Nairametrics
The Nigerian fintech space is growing exponentially, attracting the attention of foreign and local investors and attracting new entrants in the various subsectors of the ecosystem. Many of them have found gold by offering unsecured loan facilities to Nigerians, but at staggering interest rates. Of this cohort, it would appear that some met and agreed to go after the defaulters, resorting to incredibly desperate measures to recoup the loan facilities obtained from their applications.
Nairametrics results show that a number of these loan application operators are now sending short message service (SMS) and embarrassing WhatsApp messages to the close contacts of their defaulting debtors with the intention of shaming defaulters, by labeling them with terms such as “criminal”, “fraudster” and “terrible debtor” among others.
In some cases, the full names, phone numbers and photos of suspected loan defaulters are shared with their contacts such as religious leaders, church and mosque members, close friends, bosses, colleagues and members. of the family.
Victims recount their experiences
A paint manufacturer who introduced himself to Nairametrics as Adewunmi explained that he took out a 100,000 naira loan from one of the fintech companies in Nigeria (Soko loan) to deliver his products to a customer. He said he defaulted for a week but called the app staff four days before his scheduled repayment date to explain that he would not be able to meet the repayment schedule on that date.
To Adewunmi’s surprise, his pastor called him three days after he paid off the loan and asked him to see him urgently on a Friday night.
“He called me at his house to ask me why I got a loan from a business and refused to pay when due. I was empty for a few minutes before telling him that I had paid off the FinTech company, ” Adewunmi related.
“It’s not true,” replied the pastor. “A church member and the head of the prayer champions department called me tonight to have the bank send them the same message calling you a fraud and a cheater,” he said.
Adewumi remembers being flabbergasted by what her pastor said. “I showed him the proof of my payment and the response I received from the company as an acknowledgment before he believed me. From that day forward, I decided to never get a loan from a financial technology company again ”, he declared painfully.
The Soko Loan SMS sent to Adewunmi contacts read:
“This is to inform the general public that Mr. Adewunmi *** with phone *** is a chronic debtor and a fraudster. He is on the run after cheating on a money lender. You are advised to stay away from him.
Stella is another victim of the threat. In her case, she defaulted on a loan facility obtained from another FinTech firm in Ibadan for a month in October 2020. According to former staff at one of the country’s local airlines, she did not was unable to pay because she lost her job a month before the repayment deadline.
“I had planned to pay off the credit facility, but when the unexpected happened, all my plans went wrong. I contacted a designated staff member of the loan application operator and pleaded for a three month extension, which the staff agreed to.
“But I was shocked a week later when a friend I haven’t seen for five years called me, asking about my well-being and if I was affected by the lockdown. I had no idea until he told me that he received a WhatsApp message from fintech, warning him to avoid doing business with me that I was in default.
“When he sent me the message, I knew I was over my limit and decided to never do it again. My friend sent me the money and I paid off the loan. Obviously. , the plan was to embarrass me and dishonor myself, so I would go all the way to pay them back. But what if I fell into depression and lost my sanity, how would that have improved fintech? ? “ she recounted.
Another victim, Adeolu (name changed) recounted his experience to Nairametrics. In his case, he had obtained a loan of less than N 30,000 with an interest of almost 25% for a period of 15 days. The repayment was due on a Wednesday and a staff member from Kash Kash, the loan company, called to let them know the repayment was due.
Adeolu informed staff that his customer invoices were being delayed and asked the fintech company to give him until Friday, which was the last day of the month, to pay off. The staff agreed. The next day, another member of the firm called his wife, a lawyer, threatening her that the company was going to involve the police in the case.
“My wife was embarrassed, especially since I had not told her about the loan. She asked for the amount and the date of repayment. When she realized the loan was less than 24 hours overdue, she went mad and gave the staff a casual outfit. She also threatened to report their illegal action by contacting her at NITDA.
“The staff immediately became obedient and explained that I had asked to have until Friday to repay the loan. My wife assured him that there would be no further loan extensions and the company backed down. Apparently they are afraid of regulators but they take advantage of the fact that most people ignore the existence of NITDA and even the oversight functions of CBN in regulating the activities of these fintechs.
“These agencies must do more to help Nigerians know that they exist and that they are functional,” said Adeolu.
A Nairametrics analyst also shared her experience when a strange number sent her a WhatsApp message (with a photo) stating that Ms Damilola had defaulted on a loan she obtained from the app.
The message read as follows:
“LAST WARNING !!! Hello, be informed that Mrs Damilola with phone number 081303xxxxx is a defaulter who took a loan and vehemently refused to pay. Therefore, her actions were SUSPECTED. Please contact her and l ” oblige to repay their loan because the company is taking unfriendly and drastic measures, in particular by reporting their debt to the CREDIT OFFICE, because it is a PREJUDELY FRAUDULENT ACT. gave your number as EMERGENCY CONTACT. ”
The shocking news here is that our analyst does not know the lady in question and the fintech name was not mentioned either.
According to the sender, the defaulting debtor had given our analyst’s number as the emergency contact person. But one would have expected fintech to verify the information the loan seeker gave up before taking such action.
There are countless complaints on the pages of many of these loaner apps on the Google Play Store, showing the deep grief caused by these posts.
What NITDA Says About Debt Collection Strategy
The National Information and Technology Development Agency (NITDA) has called the debt collection strategy adopted by some of these fintechs a data-sharing violation.
The agency disapproved of such practices and stressed that no fintech company is allowed to share customer data without due process.
This was revealed in a press release by NITDA spokesman Hadizar Umah.
To curb the trend, NITDA imposed a penalty of N 10 million on an online lending platform, Soko Lending Company Limited (Soko Loans), for breaching data privacy.
According to NITDA, it has received a series of complaints against the company, including “unauthorized disclosures, breach of customer privacy and defamation.”
How fintechs access customer data
NITDA said its investigations have shown that Soko Loans provides its clients with unsecured loans and requires a lender to download their mobile app to their phone and activate a direct debit in favor of the company, which allows the application to access phone contacts of the lender.
“According to the complainants, when he failed to meet his repayment obligations due to insufficient credit on his account on the date on which the direct debit was to take effect, the company unilaterally sent messages undermining the privacy of the complainant’s contacts ”, said NITDA.
IT expert Tolulope Ogundipe told Nairametrics that some of the fintechs are incorporating trackers that share data with third parties into their mobile apps without providing information to users about it or using the proper legal basis.
He said, “Some of them are guilty of refusing to cooperate with the Data Protection Authority, contrary to Article 3.1 (1) of the Data Protection Implementation Framework; and non-filing of NDPR audit reports through an Approved Data Protection Compliance Organization (DPCO), contrary to NDPR Article 4.1 (7).
“I expect NITDA to make sure that all of them are in place because they will hold back others in the industry. The challenge is that most of their victims will not report their cases to the appropriate services, as they suffer in silence out of ignorance. “
While NITDA is supposed to investigate others and protect innocent Nigerians, it is important to note that the agency can only work on petitions / complaints filed by victims.
Defaulting debtors who have been or are going through this are expected to report to NITDA for appropriate action to be taken.