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Proliferation of online loan apps across Nigeria by some fraudulent and unscrupulous profiteers has become a necessary evil for many low income Nigerians, who are coerced to borrow to cushion the effects of harsh economic realities in the country. Unfortunately, many of them got trapped in the web of sham loan apps hosted on Google Play Store by individuals and companies to swindle the low-income earners. CHIJIOKE IREMEKA writes:

If James Okapara were to review the choice he made a month ago in a bid to bring his ailing mother back to life, there is no doubt, he will avoid anything that has to do with online loan apps and whatever it represents.
The 25-year-old Okpara, who hails from Orlu in Imo State, was racing against time to save the life of his mother who was lying critically ill on the hospital bed, waiting to be transfused with a pint of blood. He successfully wrestled his mother out of the cold hands of death, but didn’t escape the tragedy that struck thereafter due to his inability to repay the loan with which he bought the blood that got his mother back on her feet.

The promising young man, a skillful drummer, regretted the day he downloaded the NCash online loan app on his android cell phone.
According to Mr. Solomon ForJesus, an eyewitness, Okpara was coerced into borrowing N26, 000 on November 4, 2021 to buy the blood and was required to pay back N35, 100 on or before November 10, 2021(within six days) or risk being shamed and humiliated by the App’s debt recovery officers.

Unluckily, with the interest of N9, 100 on a loan of N26, 000 in six days, bringing the total amount repayable to N35, 100, Okpara was not able to meet up with his repayment obligation.

The young man who was full of life was hoping to travel abroad for greener pasture, based on a promise made to him by a good Nigerian. He traveled to the village to see his recuperating mother on the day he was expected to repay the loan. On his way, he made frantic efforts to repay through online transfer of the money to his lender, but due to network glitches, he could not do so successfully.

On getting to his village, Okpara wasn’t still able to repay his loan until the next day when he got a message from the Loan App’s customer care officer requiring him to repay.
Following the inability of Okpara to respond accordingly, the debt recovery officers started indulging in shaming acts, including sending hostile messages to Okpara and others in his contact. In the messages, Okpara was tagged a fraudster and members of the public were advised not to have anything to do with him.
Regrettably, the hostile messages got to the man that was to sponsor his trip abroad, who backed down on the plan after reading that Okpara was a fraudster. He distanced himself from Okpara on account of the messages.
Okpara’s dream became shattered after several failed attempts to make his sponsor see the situation from another lens. He broke down emotionally and slipped into mental distress. And that was the last straw that broke the camel’s back.
It was learnt that his blood pressure surged abysmally leading to his death after watching such a life-transforming opportunity slipped off his hands, coupled with the humiliation that followed. No thanks to the hostile debt recovery drives of the online loan shylocks spreading across the Internet.

To unravel what might have happened to Okpara and how the acts of shaming and embarrassing debtors affect them, a clinical psychologist, Dr. Candyfidel Onwuraokoye said such experience could trigger mental distress which, if not addressed immediately, can prove fatal.
“The consequence of the abnormal treatments on these online loan applicants is the possibility of the abused developing traumatic stress disorder. Remember that they are already stressed before seeking for the loan to clear their heads. Causing them more stress may trigger this condition and where help didn’t come immediately, it could prove fatal.
“This can even lead to suicidal tendencies and actual suicide. Perhaps, that could be the explanation to what happened to Okpara and may still happen to more people if this debt recovery approach is not addressed,” he said.
Other Nigerians have suffered the same fate in the hands of online lenders. It is what many people go through daily to make ends meet, unfortunately the regulatory bodies are yet to address the anomalies.
The Guardian’s investigation revealed that the impact of COVID-19 pandemic and that of strangulating government policies are the twin evils railroading the unemployed and underemployed into borrowing to feed even when they do not know where the repayment fund will come from.
“Ever increasing prices of goods and services in the country without corresponding employment opportunities, or increase in wages and salaries are double tragedies destroying Nigerians. The situation will be worse next year as the government plans to increase the fuel pump price,” said an economist, Able Ndukwe.
He noted that with job loss and pay cut occasioned by the pandemic, many low income Nigerians have resorted to borrowing to survive. Unlucky ones get trapped in the web of fraudulent loan apps.
“Though there are other genuine loan apps, the predatory digital lending apps disguise as platforms where one can access quick loans without collateral except for provision of bank verification number (BVN), name, request to permit picture and video recording, access to location, contact, media and files on device,” the economist said.

It was learnt that some fraudsters, especially amateur cybercriminals, are deliberately hosting online loan apps to enable them obtain unsuspected persons’ personal information with their banks to make a pool from which they trap their next victims. 

They require that borrowers repay loans at exorbitant interest within seven to 15 days against the 91 to 365 days displayed on Google Play Store before the app is downloaded. This flouts the Google play store’s rules as updated in August 2019.

An investigation revealed that Google Play Store does not allow apps that promote personal loans that expect the loan applicants to repay in full terms in 60 days or any time less than 60 days. Why the rule is not being enforced is a question agitating the minds of many loan applicants.

“We do not allow apps that promote personal loans which require repayment in full within 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.

Meanwhile, majority of those who downloaded these apps are currently regretting their actions. Some of them have been ripped off. They are currently calling on the Central Bank of Nigeria (CBN), Economic and Financial Crimes Commission (EFCC) and law enforcement agencies to intervene and protect them.

“My experience with Easy Credit is the worst. A girl called a day after my due date, threatening that all my contacts would be notified that I owed Easy Credit. Immediately, I made a transfer of N10, 000 to Easy Credit’s account but it wasn’t treated,” Akpotu Efeturi, a victim, said.

She claimed that after repaying the N10, 000 she borrowed, every day, she was still being charged 1.5 per cent interest for late repayment.

“I keep receiving messages on the interest charges until it accumulated to N59, 000 in a month. 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 using this app. They are fraudulent,” she alleged.
Also, if the story of Mr. Benjamin Udoh, who borrowed money from Fair Money to boost his business, is anything to go by, Nigerians who seek loans from these apps are in for serious trouble.


Udoh, a trader, borrowed N200, 000 from Fair Money and was required to repay with 50 per cent interest within three months or risk his personal bank information being shared with the public. With 50 per cent interest, he was to repay N300 within three months at N100, 000 per month. Udoh repaid N100, 000 in the first month, but in the second month, he remitted N50, 000, blaming poor sales.
Consequently, he went into default for weeks and while this was happening, he got calls and email messages from the app’s personnel asking him to offset his loan. One of the messages reads: “Dear Benjamin, your Fair Money loan of N200, 000 is three weeks overdue. Late payment attracts late charges of 1.5 per cent per day. Login to repay.” 
Though he sent to the Fair Money emails requesting additional time to repay, the 1.5 per cent late payment interest was activated and being added everyday to the loan, making it more difficult for him to shoulder. 

“A loan of N200, 000 for which I was supposed to pay N100, 000 as interest over three months resulted in my spending N230, 000 to service interest for five months due to the daily interest charges,” Benjamin lamented.

Another borrower, Olawale Adeniyi said that though the application interface was good and loan disbursements were quick, after trying unsuccessfully to repay before the due date due to malfunctioning of the apps, they still charged him for not beating the deadline.

“I took several pictures which I sent to the customer care official on the effort I made to repay my loan, but she kept telling me to switch off, which I did severally without success. I was still being charged for late payment even after I had done it. It was high interest rate of 43 per cent for a week loan.


“Moreover, the application does not permit users to choose how much they want. If they are offered a higher amount than what they want, they have no option than to take it. We want all these addressed and CBN should look into the activities of these fraudulent online loan app owners.”

Need for online loan apps
In spite of these misgivings, The Guardian investigation revealed that many Nigerians borrow money from these apps for different reasons, including financial exigencies, education, medical emergencies and consolidating current loans. Worst of them is borrowing to feed.
It was gathered that Nigerians embrace the online lending option because the loan apps do not require paperwork as against bank loans.
“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, unlike banks where you will be required to visit their office and be asked to bring collateral, guarantors and do much other paperwork. 


“Sometimes, you will be asked to return after some days or weeks to get the loan and you may not be eligible for a loan,” said a victim, Miss Augustina Ivie.
She also alleged that the apps owners make 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,” Ivie added.

One of such messages reads: “Beware of (names withheld) 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 despite 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 the 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).”

It was learnt that everyday, somebody would receive such a message to advise someone to repay his or her debt. These messages get to you because your phone numbers are in the person’s contact.

Asuquo Friday, who lives in Festac, Lagos, a father of three, had to sell his sound system and a television set to service a loan of N50, 000 he secured to pay his wife’s hospital bills after delivery of a baby.

“After paying my rent, I was left with nothing. My wife was then supposed to give birth in six weeks away, so I was hoping to raise some money before her delivery date without knowing she was going to have the baby two weeks before the date.
“At this point, I didn’t want to beg anybody before insults start coming. I resorted to borrowing N50, 000 with an interest of N25, 000 from Fair Money. You know, newborns come with many emergencies – buy this, get that – the money was going out through all angles. I couldn’t raise the N75, 000 to pay back.


“When I got the first call from the customers’ care unit which reminded me that my loan was due for repayment, and after hearing what the online loan apps normally do to their customers, I quickly sold my sound system and television to offset the loan,” he quipped.

A loan applicant, Balogun Sunday, said: “The apps and the owners are scammers. The interest rate is too much and the time to pay back is too short. How can I borrow N7, 000 and pay back N10, 000 within seven days and the money keeps increasing before the due date?
“Xcredit is a scam. I have downloaded the app, supplied all the necessary information and paid the card-binding fee, yet I haven’t been given a loan over a month now. Each time I try to apply, the app keeps telling me to try again tomorrow which never ends.
“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 loan or refund the card binding fee that I paid.”


Another victim, Modester Ibekwe, said her experience a few months ago was terrible. “Repayments will be made but deliberately the app owner wouldn’t clear the loan, to make borrowers pay artificial interest rates,” she alleged.

On the need to regulate activities of the digital loan apps operators, the Executive Director, Solomon ForJesus Foundation, Solomon ForJesus, said: “It’s now established that Nigerians patronise these apps and it has become a solution to a problem, hence there is need to regulate and monitor the activities of these people by CBN and other authorities.   
“For two months, we have supported some Nigerians with high blood pressure triggered by online loans. Majority of these apps are owned by some Chinese and supported by Nigerian investors.

Lennox Mall

“We appeal to all who want to borrow from online loans for small businesses to go for a more flexible loan company that can give longer time with low interest.

“Nevertheless, the organisation is not supporting users of online loans not to repay their loan, because every borrower must pay back what he or she borrowed, but the reason for delayed payment shouldn’t lead to public embarrassment.”


The National Information and Technology Development Agency (NITDA) labeled some of the fintechs’ debt recovery methods as data-sharing breach.
According to NITDA, such methods are frowned on 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 had fined an online lending company, Soko Lending Company Limited (Sokoloan), N10 million for violating data privacy.
The agency said the company had been the subject of a number of complaints, including unauthorised disclosures, failure to protect consumers’ personal data and breach of trust.
The problem
A bank manager, who spoke on condition of anonymity, said the fraudsters had remained in business because many bank customers were not Internet savvy and they created opportunity for fraudsters to get nearer.

“I noticed that these scammers have full knowledge of information technology. I want to believe that some of the sacked bank staff may have joined forces with the IT specialists 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 reactivate 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 first.

“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,” he said.

Shedding more light on the processes for accessing online loans from a bank or fintech and how bank customers fall victims of fraudsters, a bank’s customer care official, Samuel O. said: “For you to access an online loan, you need your 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 is stolen and you report 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 it has 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.”

The police are limited by training and equipment to handle the crime.

The Commissioner of Police in charge of Special Fraud Unit, Lagos, Kabiru Ibrahim, said the rise in the fraud was due to the ease of committing the crime. According to him, financial fraud and identity theft are not primary crimes.

“Why the police are having issues about fighting this crime is because they have a barely minimal number of trained and experienced investigators that are working with sparse law enforcement equipment. There is also lack of co-operation and commitment among stakeholders.


“All these complicate 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 a warrant, asking for orders to get into people’s accounts. Also having to write some telecos has become a lot of issues. Of course, I agree with the fact that insider abuse might be responsible for that in the law enforcement agencies and even within the organisation that are involved. All these are militating against the fight against mobile money fraud,” Ibrahim explained through Assistant Commissioner of Police, Gbenga Adeoye.

On the legality of the debt recovery approaches employed by the online loan apps, a business law expert, Chinenye Ajayi, said every individual has a right to privacy, which is protected by Section 37 of the 1999 Constitution (as amended).
According to her, the right, which is also enshrined in the Nigeria Data Protection Regulation (NDPR) Act (2019), safeguards the right of a person to data privacy.

“The terms and conditions are so widely couched that the loan applicant practically waives all rights to claim damages or sue for liability in relation to any action taken by the lender to recover the funds gullibly,” she said.
To Philips Olayanju of SPA Ajibade & Co., these concerns call for greater clarity on the regulation of digital lending in Nigeria.

He advised that any amendment of the current laws should be carefully drafted to ensure a balance between regulating the market and killing the market.
“Digital lending has become a source of hope for many SMEs and should be encouraged. An attempt to create excessively stringent laws will not only stifle the market, but also limit funding to SMEs in an already difficult business environment,” he cautioned.
A source from the CBN said: “The CBN does not license these companies you mentioned. We’ve been receiving complaints from people, but we have told them not to take loans from them. We advise the public to stop patronising them.”


When contacted, Easy Credit said they adopted their methods to be able to get their money back, adding that they had lost huge funds to debtors.

A Palm Credit customer care official, who said she did not have the right to speak to the media on behalf of the company, however said since a client made away with their N1 million, they stopped “painting words” on their debt recovery drive.

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