Loan Sharks’ Menace: Nigerians defamed by Loan Apps operators receive help

Kunle Sanni

*Taiwo, a 40-year-old Lagos-based farmer, turned to loan sharks to boost his poultry business in 2020, but what he got in return was a harrowing experience that nearly claimed his life.

Recounting his experiences in 2024, four years later, Taiwo said he had thought borrowing from popular loan apps was a good idea but little did he know that the 30 per cent monthly interest would drain his profits and leave him trapped in chains of debts that would crumble his dreams of owning a fish farm.

“At that time, I owed about ₦2 million (US 1,280) to loan apps (several). I could not feed my family, and paying my children’s school fees was terrible,” he recalled.
According to him, by May 2022 he had already owed about 35 loan apps and some of them had begun sending him threatening messages because he defaulted.

“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.”
Taiwo’s horrid experience and that of many like him are fuelling a broader movement in Nigeria with many standing up against the predatory practices of loan sharks.

Loan sharks’ menace
In Nigeria, loan applications integrated into e-commerce platforms provide swift access to funds without hassle. They also do not need extensive paperwork, making them an attractive option. However, borrowers who default payments often suffer severe consequences of defamation, cyber-stalking and bullying.
Checks on the terms for obtaining such loans, reveal high interest rates, depending on the credit score. Others include consent to access their customers’ contact lists and other sensitive data.

Experts say this type of borrowing carries significant risks, making it a problematic option for individuals needing financial assistance.
“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 in maybe their customer’s phones and in that context, what you are looking at is that,” Boye Adegoke of Paradigm Initiative (PIN) said in an interview with this reporter.
Adegoke, a Senior Manager at PIN added that the people who go to collect loans from these loan apps, in most cases, “are willingly giving out these data probably because they are desperate for whatever loan they are collecting at a point in time.”

The Federal Government has regulatory frameworks to address Nigerians’ growing reliance on digital money lenders, often known as loan apps such as the sensitisation of people taking multiple loans from the same apps.
The former Federal Competition and Consumer Protection Commission (FCCPC), Chief Executive Officer, Babatunde Irukera, acknowledged that digital money lending fills an important societal void; therefore, establishing an optimal regulatory ecology also necessitates learning from the industry and how it operates.

According to him, the FCCPC has registered over 200 loan apps as part of its initiatives to purge unethical behaviours of harassing and defaming borrowers from the digital lending industry.
The Commission in 2023, authorised 211 digital lenders. However, a review of their operations has shown that they have engaged in predatory practices that often operate in secret—a practice that has made regulation difficult despite government efforts.
For example, In 2022 and 2023, FCCPC, Nigeria’s leading consumer protection agency, closed down 18 and 37 digital money lending businesses on Google Play Store for harassing Nigerians. Similarly, Tech giant has also initiated other means to prohibit cash lending applications from being able to access users’ contact lists.
Despite these measures, some loan apps have developed ways to stay in business. 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.

A Need for Advocacy
But *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 page on Facebook as a medium to allow Nigerians to tell their stories about being slandered 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 who post 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 mentioned that he is aware of some posts containing false information on his Facebook page and has 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.

More Advocacy
In 2021, Citizens’ Gavel, a non-profit organisation focused on promoting social justice and legal advocacy, embarked on its maiden campaign to combat the practices of loan applications 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 times of the 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.
In addition, she said that 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 ‘’30 loan apps’’ that have been verified to have engaged in defamatory practices toward Nigerian citizens.

Regulatory gaps and challenges
Despite government initiatives, the absence of oversight and enforcement of data protection laws in Nigeria has allowed digital loan apps to operate freely, threatening consumer protection and financial stability. Analysts say the need for stricter regulations, involving tech giants like Google and Meta, to safeguard consumers and promote fair lending practices.

Adedoyin highlighted a significant challenge in pursuing legal action against loan apps – the lack of clear jurisdiction. She emphasised that these cases fall under civil, not criminal, matters, hence such matters cannot go to court.
Despite this, she said her organisation provides free legal assistance to victims. ‘’Unfortunately, many victims remain unaware of their rights,’’ she said.
She highlighted the difficulty in locating the physical addresses of these companies, as another form of challenge pursuing legal redress against the applications. According to her, such development has made it difficult to take legal action against them.

“We considered strategic litigation and filing class action on behalf of the affected victims. However, many of these defaulting loan companies lack traceable physical addresses, posing a significant challenge in instituting legal action against them.
“From the complaints lodged by several victims and the evidence of the breach of their data and privacy rights, we have identified over a hundred loan companies engaging in defamation, extortion, and violation of their customers’ rights. Unfortunately, our search with the Corporate Affairs Commission (CAC) revealed that these companies have 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. This situation necessitated us to engage with the government regulators and stakeholders on the need for more robust regulatory measures to ensure that these companies can be held accountable.” Adedoyin added.

The lawyer also discussed Meta’s involvement, saying that Meta platforms have gained notoriety for allowing loan apps to advertise on their platforms. However, during a meeting, Meta expressed willingness to implement anti-harassment measures and policies. Adedoyin urged the FCCPC to collaborate with Meta to address this issue.
‘’Right now, I understand that the FCPC has something like a partnership with Google, where the FCCPC 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 FCCPC 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.

Reactions
In response to an email inquiry addressed to three officials, META remained unresponsive. Adora Ikenze, the Director of Public Policy for Anglophone West Africa at Meta Platforms Inc., provided an email address to this reporter and requested that the questions be forwarded through that platform.

But Google West Africa Communication Manager, Taiwo Kola-Ogunlade responded with information about Google’s advertising policies and enforcement efforts.
He highlighted the strict ad policies and enforcement efforts to combat financial scams and protect users.

Kola-Ogunlade said: ‘’Google confirmed they have taken action against the ads violating their policies and emphasised their commitment to user safety and platform integrity.

“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 users and legitimate advertisers.

“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 said.

In an exclusive interview with WESTERN POST Online, Adamu Abdullahi, 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. It is not a criminal matter.
He said the Commission, started providing legal support to victims. ‘’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 on the matter involving more regulations with Meta, the parent company of Facebook, the official said the Commission is yet to have any formal meeting 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.

He, therefore, 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 focused on safeguarding Nigerian consumers’ rights.

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.

While *Taiwo’s primary goal remains to educate, uplift, and inspire Nigerians to overcome despair, Adedoyin’s Gavel has taken a different approach: they have been successful in obtaining apologies and retractions from loan apps that published defamatory content about them, resulting in the resolution of some cases.

Names asterisked with the symbol * requested to be identified by a first name.