New Telegraph

Online loan apps: When trapped by unscrupulous lenders


• It’s a terrible experience –Victim

• ‘I’ve paid back more than twice what I borrow’

• Fintechs’ debt recovery methods, a data-sharing breach –NITDA

• We have minimal number of trained, experienced investigators –Police

• Calling, sending messages, sharing customers’ data, invasion of privacy –Lawyer


With the COVID-19 pandemic, many Nigerians witnessed job losses and a pay cut, leading to harsh economic realities prevalent in Nigeria today. Sequel to this, some lowincome Nigerians resorted to borrowing, to cushion the effects of the economy on them. Unfortunately, many of them got trapped in the web of fraudulent loan apps hosted on Google Play Store by unscrupulous individuals and companies that considered it an avenue to exploit the poor and low-income earners. CHIJIOKE IREMEKA and BLESSING UMA report on the fleecing of Nigerians by these phoney sites


“My experience with easy credit is the worst so far. A girl called a day after my due date, threatening me that all my contacts will be notified that I’m owing Easy Credit.


Immediately, I made a transfer of N10, 000 to Easy Credit account but it wasn’t treated,” says Akpotu Efeturi, who borrowed money from Easy Credit, an online loan app but was ripped off and dehumanised.


According to her, after offsetting the sum of N10, 000 being the loan she took, every day, she was still being charged 1.5 per cent interest on late repayment as she kept receiving messages on the interest charges until the interest on the loan accumulated to N59, 000 in less than a month.

Efeturi continued: “The N10, 000 I paid earlier never reflected. One morning, all the money in my account was cleared but nobody said anything to me. I also sent the proof of payment, yet no response. I hated myself for ever using this app. They are fraudulent.”


Lending his voice, Olawale Adeniyi, said though the application interface was good and loan disbursements was quick, after trying unsuccessfully to repay his loan before the due date as a result app’s glitch, which he tried all through the day, they still charged him for not beating his loan deadline.


He said: “I took several pictures which I sent to the customer care on the effort I made to repay my loan but she kept telling me to switch off, which I did without the problem being resolved. I was still charged for late payment when I was eventually able to do it the following day. This is aside from the high interest rate of 43 per cent for one week loan.


“Moreover, the application does not permit users to choose how much loan one wants. Even if one is offered a higher amount than what he wanted to take, he has no other option than to take it. Let all these be addressed. We want these addressed and the Central Bank of Nigeria should look into the activities of these fraudulent online loan app owners.”


The above experiences reflect what poor and low-income earners suffer in the land of plenty due to bad governance and policies in the country which have worsened the impacts of the Coronavirus pandemic.

Some unprincipled individuals and companies considered it the best time to exploit the poor and low-income earners under the government’s watch. With the pandemic, many Nigerians witnessed job losses and pay cuts and with these harsh economic realities, some low income Nigerians resorted to borrowing to survive the hard times. Unfortunately, many of them got trapped in the web of fraudulent loan apps hosted on Google play store.

Although, there are other genuine loan apps operating online, these fraudulent and predatory digital lending apps disguise themselves as platforms where one can access quick loans without collateral, except provision of bank verification number (BVN), name, request to allow use of picture and video recording, access to location, contact, media and files on device.


Sunday Telegraph learnt that some fraudsters, especially amateur yahoo boys (cybercriminals) deliberately hosted these loan apps online to enable them to obtain unsuspected persons’ bank’s personal information, such as BVN and others to form a pool from where they recruit their financial crime’s victims.


They require that borrowers repay loans at exorbitant interest rates within seven to 15 days as against the 91 to 365 days claim as displayed on Google play store before their app is downloaded even as this flouts the rule of Google play store as updated in August 2019.


Sunday Telegraph learnt that Google Play Store does not allow apps, which promote personal loans that expect the loan seeker to repay in full terms in 60 days or any time less than 60 days (two months), but why this has not been checkmated, is a question in the minds of loan seekers and well meaning Nigerians.

“We do not allow apps that promote personal loans which require repayment in full in 60 days or less from the date the loan is issued (short-term personal loans). This policy applies to apps which offer loans directly, lead generators, and those who connect consumers with third-party lenders,” Google Play Store’s policy reads.


However, the majority of people who downloaded these apps are currently regretting their actions. Some of them have been ripped off and are currently calling on the Central Bank of Nigeria (CBN), Economic and Financial Crime Commission (EFCC) and law enforcement agencies to intervene with the sole aim of protecting them from these broad day robbery and exploitation.


If the story of Mr. Benjamin Udoh, who borrowed a certain amount of money from online loan apps to boost his business, is anything to go by, Nigerians, who seek loans from these loan apps as the fastest and most effective source of soft loans, are in serious trouble.


The CBN and security agency in Nigeria, should, therefore, wade into the alleged fraudulent activities of these digital loan apps owners to save Nigerians from further exploitation and dehumanisation they are subjected to by both Nigerian and foreignowned shylock loan apps.


Udoh, a trader, obtained a loan of N200, 000 from an online loan lending app, Fair Money, to expand his business horizon. He was required to return the loan with 50 per cent interest within three months of securing the loan or stand the risk of his personal bank information being given out to the public with nasty comments.


With 50 per cent interest on the N200, 000, he is meant to return N300,000 (that is N200,000 loan and interest of N100, 000), within three months. He is expected to repay N100, 000 on monthly basis for the three months duration of the loan. Unfortunately, he was able to repay the N100, 000 on the first month but not the second month as he was unable to pay N100, 000.


Instead, he remitted N50, 000 due to bad sales, according to him. Following his inability to repay at the right time, he went into default for weeks and while this was happening, he got calls and emails from the app’s personnel, urging him to offset his loan.


According to him, he equally got text messages to that effect, which read, “Dear Benjamin, your Fair money loan of N200, 000 is three weeks overdue. Late payment attracts late charges of 1.5per cent per day.


Login to repay,” Though he sent the Fair Money emails, requesting additional time to repay, the 1.5 per cent late payment interest was activated and being added every day to the loan, making it more difficult for him to shoulder the cost of the loan, and loan itself.


“A loan of N200, 000 for which I was supposed to pay N100, 000 as an interest over three months resulted in my spending N230, 000 to service interest on the loan for a duration of five months due to the daily interest charges of 1.5 per cent,” Benjamin regretted.


These are, nevertheless, the daily experiences of Nigerians who borrow money from these ubiquitous loan apps to solve one financial problem or the other. Though it’s useful to many of them, many others regret getting involved in these apps; they are currently counting their losses.


Sunday Telegraph’s investigation showed that many Nigerians borrow money from these apps for a variety of reasons, including financial exigencies, education, medical emergencies, consolidating current loans, and many more. Worst of it is borrowing to feed.


Sunday Telegraph also discovered that Nigerians prefer to borrow money from these online loan apps rather than going to the banks, despite the fact that their interest rates are significantly higher. It was leant that their preference for Apps loans to bricks and mortar four walls of the banking halls hinges on the fact that the loan apps do not require paperwork and are easy to secure.


Yet, what they gain in one hand, they lose on the other hand as physical banks do not handle their debtors with such disdain with which the loan apps treat their clients all in the name of debt’s recovery drive.


A victim, Mr. Chidibere Igwe, said: “The app loan is easy to secure though it comes with a high interest rate. After registration and confirmation of your information, a loan will be disbursed to you without having to visit their office, unlike banks where you will be asked to visit their office and be asked to bring collateral, guarantors and do many other paperworks and you will be asked to return after some days or weeks to get the loan and sometimes, you might not be eligible for a loan.”

Consequent upon this preference, these fraudulent individuals see it as an opportunity to defraud the vulnerable by hoisting the loan apps which, most times, are downloaded from Google play store for Android users with a view to exploiting and defrauding them.


The victims of these app loans told Sunday Telegraph that apart from the high interest rates they charge, they also make such illegal and non-consented deductions from debtors’ bank accounts. “Once you default, you start receiving threat calls from their staff, threatening to share your BVN and personal details on social media.

Most times, they carry out their threat by sharing horrible text messages or Whatsapp messages to all your phone contacts,” he said. Some of the messages read: “Beware of Jonathan Salvation with phone no (080xxxxxxx).


He is a chronic debtor on a run; he is defaulted from a loan firm with a certain amount of money and he is acting fraudulent to pay his debt despites several calls and messages. “He will be declared wanted if he did not pay his debts. If you know him and love him, tell him to pay his debt he owes the company. If not, his details will be published on all social media as a criminal.


Thanks. Please call for more information (080XXXX).” From many reviews from Google play store, it shows that, perhaps, 70 per cent out of these apps are fraudulent and were just built to scam people of their hard earned money since some Asian citizens and Nigerians with fraudulent mind set went into the business.


Another victim, one Bibiana Ekebuisi, wrote online: “The operators of these apps are criminally minded. They copy your contacts and send fraudulent messages to people on your list that you are a thief whereas their app is defined to fail during repayment, so that you will default and incur more debts.


“With this method, they damaged my name and sent it to the credit bureau but never bothered to clear my name with the credit bureau, even when I paid back the loan.


So, these guys are hackers. I just put this one star so that I will be able to send this post.” In another experience, Balogun Sunday, had this to say: “I would have given Five Stars but both the app and the owner are scammers.


Firstly, the interest rate is too much and the time to pay back is too short. How can I borrow N7,000 and you are asking me to pay back N10,000 within seven days and the money keeps increasing every day before the due date. “You guys are trash. Just fix your app, let me pay back and delete the app on my phone. Xcredit is a scam.


I have downloaded the app, supplied all the necessary information, paid the card binding fee and yet haven’t been given a loan. This is over a month now and every time. I try to apply, and they will tell me to try again tomorrow. I feel Xcredit is after the BVN and the card binding fee only.

If not, why didn’t the system reject the card binding fee since I’m not eligible for a loan? Xcredit should give me a loan or refund the card binding fee.”


According to Modester Ibekwe, another victim of alleged online loan app scammers, her experience a few months ago was terrible, saying that repayments will be made but the app owner wouldn’t clear the loan deliberately just for borrowers to pay artificial interest rates.


“I made my payment on October 17, 2021, sent the proof of payment on WhatsApp and made several calls to the App’s representative. Despite all that, the loan was still in overdue. This is so ridiculous and I can see obviously that is not only peculiar to me after reading your customers’ review email but no response yet. I would advise Nigerians to stay away from some of these Apps. They are extensions of yahoo scammers.”

As follow-up to these fraudulent activities of these loan apps owners, Nigerian youths, who are the major victims of these exploitation and dehumisation, are calling on the Nigerian government to do the needful and save them from these fraudsters since they can’t do without seeking for soft loans.


As a response to these calls and in a bid to discourage the continued exploitation of poor Nigerians, the National Information and Technology Development Agency (NITDA) labeled some of these fintechs’ debt recovery methods a data-sharing breach, saying that such methods are frowned upon by the regulator, which emphasises that no fintech company is permitted to divulge its clients’ data without due procedure.


NITDA’s spokesperson, Hadiza Umah, said the agency has fined an online lending company, Soko Lending Company Limited (Sokoloan), N10 million for violating data privacy.


According to NITDA, the company has been the subject of a number of complaints, including unauthorised disclosures, failure to protect consumers’ personal data, and a breach of trust.


The problem


A manager at Zenith bank, who spoke on the condition of anonymity, said one of the major issues that have helped these fraudsters remains that many bank customers are not internet savvy and they created a huge get-out for fraudsters to get nearer.


The source said: “I noticed that these scammers have full knowledge of information technology. I also want to believe that some of the sacked bank staff may have joined forces with the IT specialist to get these things done successfully. “What we do is, when a bank customer reports a stolen or missing phone, we block the customer’s account and deactivate all his or her online banking activities and apps.


Once we do that, it takes a month or two for the customer to activate the platforms. “This is because it takes the system a while before it can reassign another profile for the customer. If you do not compromise, there is no way these people can get you.



They must get either your phone SIM or ATM card. “That is why I said all those online platforms we are using don’t have facial or print recognition. The moment one inputs the correct information required for the transactions, a command will be issued and the transaction will go through without seeking to confirm the information with a photograph.”

Shedding more light on the processes for assessing online loans from a bank or fintech and how bank customers fall victims of fraudsters, a bank Customer Care Specialist, Samuel O. said: “For you to access an online loan, you need your Bank Verification Number (BVN) and if you don’t pay back, they blacklist your BVN.


“When your phone is stolen and you receive an alert in that phone, it is as good as giving out the right to your account. Anything you can do on your account, they can do. “If your phone was stolen and you reported it to the bank after four to five days, those guys would have done what they wanted to do.


In fact, they do it within hours. If you report at that time (after days) and the bank says they have blocked the account, that is medicine after death.


“The things those guys now do is that they take the phone, especially that of people they are close to and clone the SIM. Give you the cloned SIM and keep the original. So you just find out that you are not getting calls or text messages. “You will think it is your network but those guys will be doing what they are doing. It will take a long time for you to realise what is happening.”


However, the police are limited by training and equipment to handle the crime. At a conference held recently in Lagos, the Commissioner of Police in charge of Police Special Fraud Unit, Lagos, Kabiru Ibrahim, represented by the Assistant Commissioner of Police, Gbenga Adeoye, said the rise in fraud in the country is due to the ease of committing the crime and that financial fraud and identity theft are not primary crime.


Adeoye said why the police were having issues about fighting this crime is because the police have a barely minimal number of trained and experienced investigators that are working with sparse law enforcement equipment and lack of cooperation and commitment among stakeholders.



He said: “All these complicate an investigation and prosecution of perpetrators of mobile money fraud. The processes that we take in the investigation can be cumbersome, time-wasting and can affect the investigation.


“We have to write to the court asking for warrant, asking for orders to get into people’s account and even at that, also having to write to some telecom industry has become a lot of issues in the past. Of course, I agree to the fact that insider abuse might be responsible for that in the law enforcement agencies and even within the organisation that are involved.


“Now, we can no longer write but to pass our writings through a specific branch of the Force, which can waste a lot of time, and again when these people are now eventually charged to court, the kind of light bailing condition that the court will give them and the general slow judicial processing that we have that will make them come out and still commit a similar crime again, they are all militating against the fight on mobile money fraud.”


He also noted that the ease of committing the crime was on the rise because of the low risk of committing the crime and the fact is that even if they are caught, there is no tendency for them to be injured.


“It is not like an arm robbery, where if you want to rob a bank, you will know that either you are killed or you have to kill. But these people can just do whatever they want to do. We should also know that financial fraud and identity theft are rarely a primary crime. “They are always attached to an initial crime.


Before they are committed, there must have been theft of a wallet, personal identities, financial information, either on email or when people’s houses are burgled, phones, and identities will be stolen from them. So, investigators must have noted the vital cause between these kinds of crime,” he added.


Speaking on what makes these measures legal or otherwise, what customers who ‘fall victim’ can do, and other measures which loan apps could employ, so as not to run afoul of the law, a Business Law Expert, Chinenye Ajayi, said on the issue of privacy invasion and the legality of the strategy of harassment employed by loan apps, every individual has a right to privacy, which is protected by Section 37 of the 1999 Constitution (as amended). She noted that this right was also enshrined in the Nigeria Data Protection Regulation (NDPR) (2019) which safeguards the right of a person to data privacy.

She, however, noted that this right can be waived by the individual entitled to the said rights and this is usually what loan apps make their customers do. “The terms and conditions are so widely couched that the loan applicant practically waives all right to claim damages or sue for liability in relation to any action taken by the lender to recover the funds,” she said.


This is based on Paragraph 2.3 (2)(b) of the NDPR which provides that in procuring consent, if the Data Subject’s consent is given in the context of a written declaration which also concerns other matters, the request for consent shall be presented in a manner which is clearly distinguishable from the other matters, in an intelligible and easily accessible form, using clear and plain language. Any part of such a declaration which constitutes an infringement of this Regulation shall not be binding on the Data Subject.”

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