When I decided to start this project three years ago, I was very much aware of the dangerous effect this may have on me and my personality but my motivation to carry on was based on the fact that if everyone remains silent, this may continue to go on.
I first came across loan apps in 2018 when I got a message that one of my contacts is owing a certain loan app and had ran away with their money. I immediately called the person who told me that he was only being blackmailed by the company to pay up extra charges incurred due to his late repayment of the loan he took.
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I started to wonder how these companies got my contact, who gave them the access to the data on the phone of the person applying? I immediately decided to research on them. I read reviews upon reviews about the activities of these companies and decided to carry out a proper investigation on them.
How loan apps operate
While there are some Fintech companies that give out loans and abide by the law on data privacy, one of the numerous sins of some of these companies is the infringement on the data privacy right of Nigerians as contained in Section 37 of the 1999 constitution as amended.
These apps, once downloaded, ask you to grant them permission to access your contacts for risk management purposes. In their terms and conditions, they also state that your information will not be shared with anybody and it is highly safe with them but this has not been the case as we will see below.
These apps collect your details, give you a loan to repay in one or two weeks with an interest rate of 45 percent as against the CBN interest rate of 13 percent per annum.
To fully understand the workings of these apps, I decided to try out a few myself. I downloaded three. Two gave me loans with an interest of 11.9 percent to repay in a month, while the third gave me a loan with an interest of 40 percent to repay in two weeks. I immediately wrote to the FCCPC to report this, but didn't get a reply.
What happens when you default?
A defaulter on some apps are defamed, contacts blackmailed and called criminals. As part of research findings, I defaulted in some the apps and while an interest of 5 percent is added daily, the companies who now have access to your contacts, starts calling them, sending them messages and calling you a criminal on the run.
One very notorious loan app go as far as sending messages to your contacts saying you are HIV positive, while still expecting you to pay the money.
One thing about these companies are their agents; young Nigerians who are recruited and made to work under difficult circumstances.
Loan agent staff
One common feature of these companies are their agents. They're known for their arrogance and harshness. I once engaged one of the agents of in a conversation, when I wanted to know about the owners of these companies. I will withhold the name of this agent for the person's safety. My conversation with the agent shows that they are made to work for seven days a week, are paid less than N30,000 a month and are given a daily target of 40 /50 recoveries daily.
When one of your contacts fails to pay, the company deducts five percent of the person's salary from the agent's salary and most times, some of these agents are left with no monthly salaries. My contact told me that this is what has led them to messaging the contacts of their customers.
Are your data safe with these companies?
Data privacy is one very fundamental right of person across the world. In Nigeria, NITDA has done a lot in ensuring that the laws governing data privacy are respected and adhered to as I was made to understand during my findings with them.
Most data received by these loan apps are not safe as they are shared with other loan apps that keep calling you and pleading with you to take loans from them.
Secondly, they are also shared with fraudsters who call you to put money into their accounts or your information will be shared to your contacts. Many (which I want to keep their names private for now) are guilty of these. They blackmail their customers into paying twice and claiming one was by a fraudster. I experienced this personally.
It is interesting to note that most of these companies are operated by the same people. One has over six different apps. Another app is notorious for this kind of operation is palm credit.
Owners of the company
My discussion with a few recovery agents of these companies told me that their supervisors are Chinese. In fact, I was told by one agent that these companies are Chinese owned and the difference between them and the professionally run loan companies could be seen.
My most shocking encounter was when one agent told me that these Chinese have government collaborators. The agent informed me about one that was recently closed down by FCCPC, but are today still functioning and are back in operation.
Collaborators
Some fintech companies are one of the biggest collaborators according to my findings. They assist these companies in sending payments and receiving payments.
Reports of harassment
As usual with reports from Chinese companies working in Nigeria and Africa at large, issues of human right abuses are always rampant. Agents of these loan companies who I spoke to talked about the harassment from company owners.
From sexual harassment to physical harassment; agents are being slapped, insulted and called names by their Chinese owners for failing to meet their targets.
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No known addresses
In a report, Babatunde Irukere, the ED of FCCPC, once noted that the challenges of tracking down these companies are due to the fact that they have no known addresses and as such operate in a clandestine manner.
Some of the agents who spoke to us are willing to give the location of a few of these agencies that we will publish in the second part of this story.
Tax evasion
While these companies earn high return from loans, it is still important to find out if they pay tax to the Nigerian government.
I reached out to a tax expert who noted that any organization that operates illegally has no business paying tax in order to avoid detection.
The big question is: how are they still operating, including the one FCCPC shut down? And why are fintechs helping loan sharks who are clearly working against the laws of Nigeria? If these companies are legal, why do they not have known addresses and can they display their tax papers?
Part 2 of our findings containing details and transcript of conversations with agents, will be out later this month
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