Taiwo, a 40-year-old Lagos-based farmer, urgently needed funds to support his poultry business in 2020. Desperate for financial assistance, he turned to Digital Money Lenders (DMLs) commonly known as loan sharks, only to endure a 30% monthly interest rate that would later drain his profits for the next two years.
Recounting his ordeal with Pluboard, Taiwo said he initially believed borrowing from popular loan apps was a good idea. However, the terms required from these loan apps put him in a cycle of debt that shattered his dream of expanding his business with a fish farm.
“At that time, I owed (several) DMLs about ₦2 million (USD 1,343),” said Taiwo who requested to be identified only by first name. “I could not feed my family, and paying my children’s school fees was a nightmare.”
He said that by May 2022, he had already borrowed from about 35 loan apps, and many had begun sending him threatening messages due to his inability to repay.
“Eventually, almost all of my contacts learned about the situation. I almost fainted, and my blood pressure began to rise, and I could not eat,” he said.
Taiwo’s horrid experience and that of many like him are fuelling a broader effort by some Nigerians to stand up against the predatory practices of digital loan sharks.
In Nigeria, loan applications provide swift access to funds without hassle. Unlike other e-commerce platforms, they usually do not need extensive paperwork, making them an attractive option for lenders. However, these platforms typically come with high interest rates and potentially exploitative terms, such as access to the borrower’s contact list and other personal data.
Borrowers who default on their loans may face serious consequences, including defamation, cyber-stalking, and bullying.
The federal government signed the Nigeria Data Protection Act (NDPA) in 2023 to curtail such infractions. However, experts have called for stricter enforcement of laws such as the NDPA and criticised the borrowing methods used by these loan apps, saying they carry significant risks and are a problematic option for individuals seeking financial assistance.
Festus Ogun, a human rights activist and lawyer said the loan app operators violate Nigerian laws, especially the NDPA which protects personal information.
“We have said it again and again that the loan companies do not have any lawful basis to process the personal data of individuals, this is notwithstanding any privacy policy contained in their website,” he said.
In an interview with Pluboard, Boye Adegoke, senior manager at Paradigm Initiative (PIN), said: “When you talk about loan apps, what you are dealing with is that you have data breaches that have happened, because loan apps can access the data on maybe their customers’ phones, and in that context, what you are looking at is that.”
Adegoke added that in most cases, borrowers seeking loans from these loan apps “are willingly giving out these data probably because they are desperate for whatever loan they are collecting at a point in time.”
Adamu Abdullahi, a former acting executive vice chairman/ chief executive officer of the Federal Competition and Consumer Protection Commission (FCCPC) said the Commission would intensify its enforcement efforts to ensure that digital lenders are complying with its regulation.
According to him, lenders should not consider violating the commission’s regulation by using unethical means for debt recovery.
In 2022 and 2023, FCCPC closed down 18 and 37 digital money-lending businesses on Google Play Store for harassing Nigerians. Similarly, tech giants have initiated other measures to prohibit cash lending applications from accessing users’ contact lists.
Despite these measures, some loan apps have developed ways to stay in business. An investigation by Pluboard in 2023 uncovered how many use the APK format to operate. The APK measure is only useful for Android phones.
“The scarcity of data on the number of unlicensed lenders defaming Nigerians is attributed to the reluctance of many individuals to discuss their debt situations, ” the senior manager and analyst added.
“I think the big challenge that I would like to highlight is that these things in data breaches don’t get reported,” Adegoke said.
He noted that this reluctance hinders “cyber security resilience” in the ecosystem because reporting breaches, learning from them, and sharing information helps prevent future occurrences.
Advocacy campaign against harassment
Taiwo, who is now a business analyst and IT quality assurance specialist, has spent the last two years advocating for Nigerian citizens who have been defamed by loan applications.
He would later create a website and a Facebook page as a medium to allow Nigerians to tell their stories about being slandered and defamed by some loan Apps.
His Facebook page, “Financial Freedom & Say No To Loan Shark” was created on December 27, 2021, and has about 52,734 members, primarily Nigerians who post and discuss their experiences on defamation from loan sharks.
“It gives me utmost joy to see people freed from the clutches of loan sharks. I hope to educate people and help liberate them,” said Taiwo, noting that over 40,000 people have directly or indirectly benefited from the group and a website he launched to publish articles about stories of people who have been defamed.
Speaking on some challenges, Taiwo said he was aware of some posts containing false information on his Facebook page and had taken measures to address this issue. He explained that he has established a method to flag and delete any posts containing misleading information and that users can do the same.
According to him, ‘’Over 70% of the posts are genuine. We verify many posts through an approval process, although some users with badges can post directly. We have implemented measures to allow group members to flag such posts. Daily, we decline an average of 30 posts. Additionally, measures are in place to ban or suspend user accounts.
In 2021, Citizens’ Gavel, a non-profit organisation focused on promoting social justice and legal advocacy, embarked on its maiden campaign to combat loan application practices of defaming Nigerians. The initiative was spurred by the alarming number of complaints received regarding data breaches and harassment perpetrated by digital loan apps, particularly during the challenging COVID-19 pandemic.
In an interview with Pluboard, Funmi Adedoyin, a legal consultant at Citizens’ Gavel, addressed the alarming practice of predatory digital loan apps using defamation as a loan recovery tactic. She revealed that many victims have reached out through their social media platforms, highlighting the urgency of addressing this troubling trend.
‘’Because even after paying the principal interest, they (Loan Sharks) keep extorting and threatening them. Suppose you don’t pay this charge if you don’t pay this fine if you don’t pay this fee.’’ She said, “There are no benchmarks. There is no written agreement on how much to pay back. And so, because of that, they face harassment.’’
“Our helplines on X (formerly known as Twitter) and Facebook came with different complaints. And we were receiving several complaints of harassment by loan apps,’’ Adedoyin added, noting, however, that there was a pattern in the practices of these apps that were becoming normality.
She also said a separate survey showed that many Nigerians learned about these applications from advertisements on social media platforms such as YouTube, Facebook, and Instagram.
The lawyer stated that her organisation has so far filed petitions with various regulatory bodies, including the Federal Competition and Consumer Protection Commission (FCCPC) and the Nigeria Data Protection Bureau (NDPB), against approximately “30 loan apps” that have been verified as engaging in defamatory practices toward Nigerian citizens.
Regulatory gaps to sue and challenges
The federal government has implemented regulatory frameworks to address Nigerians’ growing reliance on DMLs, including laws protecting the rights of its citizens and sensitisation of people taking multiple loans from the same apps.
Despite these efforts to regulate digital money lenders and protect citizens, lack of oversight and enforcement of data protection laws has allowed digital loan apps to operate freely, threatening consumer protection and financial stability.
The FCCPC established the regulatory frameworks known as its Limited Interim Regulatory/Registration Framework and Guidelines to address Nigerians’ growing reliance on loan apps such as the sensitization of people taking multiple loans from the same apps.
A review of parts of the guidelines includes allowing these loan apps not to register a maximum of five loan applications.
Also, key requirements for lenders include explicitly prohibiting ‘Unethical loan recovery methods’, such as harassment or public shaming of borrowers, ‘Unauthorized access to borrowers’ personal information, and ‘Misrepresentation of loan terms or conditions.’
Citing the Nigerian Cybercrimes (Prohibition, Prevention, Etc.) Act of 2015, Oluwatosin Iseniyi – lead, AI and Data for Society Unit Nigeria, at civic tech nonprofit BudgIT said the law does not explicitly mention “cyberbullying”.
He said it only criminalises actions that involve using electronic communications to intimidate, threaten, or harass individuals.
“The legal framework provides a basis for prosecuting entities, such as specific loan applications, that engage in online harassment or public shaming of borrowers,
He also mentioned the Nigerian Central Bank (CBN) guidelines supporting the establishment and regulation of DLMs are designed to ensure that fewer operate within the bounds of the law and uphold the rights of consumers.
“Nigerian laws provide mechanisms to address the harassment of individuals through cyberbullying by loan applications and the imposition of excessive interest rates. Enforcement of these laws is crucial to safeguard consumers and promote fair lending practices,” he added.
Speaking on the challenges of pursuing legal action against predatory loan apps, Adedoyin explained that these cases fall under civil, not criminal, matters and, as a result, cannot be taken to court in Nigeria.
She also highlighted the difficulty in locating these companies’ physical addresses, noting that multiple searches with the Corporate Affairs Commission (CAC) revealed that many of them use fictitious or non-existent addresses.
“Without a traceable address, it becomes challenging to serve court processes and other legal notices. Even if a judgment is obtained, enforcing it against a company with no address can be nearly impossible,” she said.
Despite these hurdles, she said her organisation provides free legal assistance to victims. However, ‘’Unfortunately, many victims remain unaware of their rights.”
Adedoyin also stated that her “organisation is engaging with the government regulators and stakeholders on the need for more robust regulatory measures to ensure that DMLs can be held accountable.” Adedoyin added.
What are tech giants doing?
Analysts say there is a need for stricter regulations, involving tech giants like Google and Meta, Facebook’s parent company, to safeguard consumers and promote fair lending practices.
“If Meta, Google, and regulators work together, the government can create a fairer system that protects Nigerians from these predatory loan apps,” Iseniyi urged.
He said “Meta (which owns Facebook, Instagram, and WhatsApp) and Google must do more to protect Nigerians. They should set stricter rules to stop these loan apps from advertising freely.
Iseniyi noted that only registered and well-regulated financial companies should be allowed to promote loans on either META or Google.
He added, “Also, there should be a way for people to report lousy loan apps so that their ads can be removed and, if necessary, banned from these platforms.
Adedoyin of Gavel also criticised Meta, for what she described as its reputation for hosting and allowing advertisements from DMLs despite numerous comments and complaints about them.
She added that Meta’s silence and lack of sanctions have created an environment where these apps can continue their illegal activities, defaming Nigerians without consequences.
However, she revealed that during a meeting with Meta, the company expressed willingness to implement anti-harassment measures and policies.
Adedoyin also urged the FCCPC to extend its partnership by collaborating with Meta, similar to its existing cooperation with Google, to address the issue of defamation effectively.
She said, ‘’Right now, I understand that the FCPC has something like a partnership with Google, where the FCPC can report these non-companies that harass and defame engineers to Google and then Google would backlist them and remove them from their platform.
“But Meta does not have this. And there are, if you go on Meta, there are so many ads, advertisements of non-companies that are dis-registered and unlicensed loan apps that are, you know, that are hosted on Meta freely. Instagram, Facebook. So, and the FCCPC, we don’t think the FCPC has any kind of arrangement towards that.”
‘’But they said they need the government’s approval to target loan sharks and unlicensed loan apps on their platforms,” she recalled saying such collaboration would prevent online lenders from establishing an online presence through advertising.” She added.
META keeps mum, Google speaks
META did not respond to an email request sent to three officials, including Adora Ikenze, Meta’s Director of Public Policy for Anglophone West Africa. Despite requesting that questions be submitted via email, none of the officials provided a response.
Google West Africa communication manager, Taiwo Kola-Ogunlade, responded with information about Google’s advertising policies and enforcement efforts. He said Google has strict ad policies and enforcement efforts to combat financial scams and protect users.
According to him, Google has continuously updated these policies to combat new risks, prevent fraud, and protect both users and legitimate advertisers.
‘’Google confirmed they have taken action against the ads violating their policies and emphasised their commitment to user safety and platform integrity,” said Kola-Ogunlade.
“At Google, we have strict ad policies governing the types of ads and advertisers allowed on our platforms. We continuously update these policies to combat new risks, including financial scams that can cause significant harm. We have robust rules for advertising financial products to prevent fraud and protect both users and legitimate advertisers.”
Kola-Ogunlade also expressed appreciation for Pluboards’ efforts in identifying specific videos related to contentious loan app advertising on YouTube. He stated that these videos had been reviewed and removed because they violated Google’s policies on financial products and services.
He said, “We appreciate you bringing the specific videos to our attention. We have reviewed them and taken action against the ads for violating our financial products and services policies.
“We remain committed to protecting our users and maintaining the integrity of our advertising platforms. We’ll continue investing in enforcement and policy refinement to address emerging threats,’’ Kola-Ogunlade added.
In an interview with Pluboard, Abdullahi, the former Acting Executive Vice Chairman/CEO of FCCPC, called on Nigerians to be aware of their rights, saying owing a debt is ‘’purely a civil matter and not a criminal matter.”
He also mentioned that the Commission has launched a legal support service for victims who have been defamed by certain predatory apps.
Abdullahi said, ‘’Many of these victims don’t even understand their rights. They don’t understand that the fact that you are owing a loan app does not mean that they have to breach your rights, and your data privacy rights, or they have to go to the extreme extent of defaming you, putting you under so much pressure.
Reacting to the matter involving more regulations and partnership with Meta, the official admitted that FCCPC is yet to have any formal meetings with the US-based Tech giants.
Abdullahi added it had invited other regulatory agencies to establish a committee to address issues related to loan sharks. He mentioned that FCCPC had also worked with Google to eliminate loan shark apps from the Play Store.
Therefore, he urged Gavel and other CSOs dedicated to protecting the rights of Nigerians to collaborate with the commission. He stressed that FCCPC is willing to partner with organisations that are focused on safeguarding the rights of Nigerian consumers.
He also urged the general public who need urgent cash and financial assistance to take advantage of the federal government Nigeria Consumer Credit Corporation (CREDICORP) initiated by the current administration of President Bola Tinubu.
Iseyin of Budgit advised Nigerians to avoid using DMLs as a way to protect themselves from predatory practices. He also urged the government to enforce laws and manage DML operations.
While authorities work on enforcement, individuals like *Taiwo said he is focused on empowering Nigerians to speak up, encouraging them to shed fear and demand their rights. Meanwhile, Adedoyin’s Gavel has pursued a more direct legal approach, successfully securing apologies and retractions from loan apps that defamed users.
This work was produced as a result of a grant provided by the Africa-China Reporting Project based at the Wits Centre for Journalism at the University of the Witwatersrand, Johannesburg. The content and findings do not reflect the views of the funder.
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