By Kate Halim
When Mrs. Joy Egbuonu received a text message that her friend had taken a loan from a company whose name she never heard before, she became worried.
At first, she thought it was a scam. But then she said she decided to call her friend who was an entrepreneur to find out if she knew anything about the company that sent the message.
According to Egbuonu, her friend opened up to her that she knew the company, a fintech loan firm, and that she had borrowed N50, 000 from them eight months earlier. Unfortunately, her friend said, she couldn’t pay back because her business wasn’t moving smoothly like she had envisaged.
Egbuonu told Saturday Sun that she was sad that her friend who was going through a financial difficulty didn’t come to her for help. She said she planned to send her friend some money by the end of the month to pay back the loan she collected.
But Egbuonu wasn’t expecting what happened next. A week later, she received another message from the same micro loan company, calling her friend a criminal and advising Egbuonu to desist from doing any financial transaction with her, as the friend could not be trusted.
Egbuonu said she lost it and when she called her friend again to inform her of this latest development, the fiend was crying on the phone.
The woman that took the N50, 000 loan told Egbuonu that the fintech company sent the same message to some of her contacts, adding that people had been calling her to ask what happened.
Egbuonu told Saturday Sun that it took the monetary contribution from her and some other people to help her friend pay back the loan. That was when they stopped harassing her friend, Egbuonu recalled.
Different companies, same messages
Mr. Daniel Okoli went through a rough patch in January this year. His business was going down fast because his wife was sacked last year during the COVID-19 pandemic. He became the only breadwinner for his family of six.
Okoli revealed that it was a tough period for him, as his wife kept complaining about money. He also noted that his savings were depleting fast given the high prices of foodstuff and other basic necessities.
The 43-year-old father of three told Saturday Sun that his only means of livelihood was going down and he needed quick cash to inject into his business. He said he called on some family members and friends to assist him with money but they also told him they were going through tough times.
Okoli then asked someone if he could be his guarantor so he could take a loan from a micro finance bank in his area, but he said the person advised him to try any of the digital micro loan companies online. Okoli said he decided to give it a try.
He said: “I went to Google Play store and downloaded the mobile app of the fintech loan company I was told about. The app required me to fill out some information, including first and last names, phone number, house address, BVN and to capture a passport photo with my phone.”
According to Okoli, he then proceeded to apply for a loan. He followed the instructions, agreed to the terms of agreement and entered his bank account details. Before long, he got a credit alert of N100, 000 in his account.
Okoli said that he was to pay back the loan in six months with interest but regretted that things didn’t go as planned. His wife became sick and he had to spend a huge amount of money on her hospital bills. As a result of these, he couldn’t save money from the profit he made to pay back the loan.
“That was when my nightmare began. A representative of the company called me and started threatening me. He said if I didn’t pay back the loan in a week, I would be exposed for being a fraud. I tried to explain why I defaulted, but he refused to listen to me,” Okoli added.
One week later, Okoli was receiving calls and messages from friends and family members who had received messages from the micro loan company, calling him a criminal and a fraudster and telling the friends to give up his location.
Even though Okoli was able to repay the loan, he vowed never to have anything to do with any micro loan company again. He said they harassed him, his contacts and exposed him because of a small debt. Okoli added that it took him time to recover from that embarrassment.
Precious Ossai recounted how she received messages from a popular micro loan twice. She said that the first time she received this message, the identity of the person who they said took a loan didn’t ring a bell, so she ignored it.
Days later, she received the same message from the same company calling this person a criminal and asking her to reveal her whereabouts or face criminal charges. Ossai noted that she was confused about the whole thing.
She told Saturday Sun that the text message included her friend’s name and number. It also included a paragraph saying that her friend agreed with her to collect the funds and that if the borrower didn’t pay back, her own details would be published on social media alongside that of her friend.
Ossai said that she hadn’t been in contact with this particular friend for three years and she wasn’t aware that she entered such an agreement on her behalf. She said when she called her friend, the friend admitted to her that she indeed took a N30, 000 loan from the company but was finding it hard to pay back. Her friend confessed that she was in a financial crisis.
Chiamaka Nwoye is recuperating after having an accident on her way to collect money from her ex husband to pay back the loan she collected from a digital micro lending company.
Nwoye revealed that she had been at home for over two weeks now after hurting her legs when a bike she boarded almost collided with a trailer. She added that it was the way the company was sending messages to her contacts that made her desperate to get money just to pay them back.
Nwoye said: “I applied for a loan of N50, 000 in March and I have paid back N20,000 but was finding it difficult to pay the balance. We all know how tough things are in this country. What I didn’t envisage was receiving calls from my friends, even people I haven’t heard from in years asking me if I borrowed money from a micro loan company and why they were calling me a criminal.”
Nwoye, who said she was grateful to be alive, told Saturday Sun that the company also sent a threat message to her ex-husband. When he discovered what happened, he told her to meet him somewhere to collect money and that was when she had the accident.
“In the message the company sent to some of my contacts, they called me a criminal and a fraudster. I felt so bad that they would go to this extent because of N30, 000. When I called their customer care number to state how I felt about their debt recovery approach, the representative I spoke with was rude and even hung up on me,” Nwoye added.
Last month, Mr. Benjamin Idika received three different messages from three different micro loan companies calling his friends and acquaintances all manner of derogatory names. Idika said he was shocked with the level of unprofessionalism of these companies.
According to him, the first message he received was about a former church member in Abuja. He said he had lost the man’s contact, only for him to receive a message from an unknown company with the guy’s name and number, calling him a criminal.
Idika added that the second message was about his neighbour who borrowed N50, 000 from a digital lending company earlier this year when he lost his job and was struggling to find his feet financially.
But the last straw for Idika was the message he received about his close friend. In the message, the company said the friend took money from them and had refused to pay back. The message called the friend a criminal. His name and phone number were included in the message.
Idika stated that the message made him angry because he didn’t know the number of people that would have also received that message. He said that he felt bad and embarrassed on his friend’s behalf. He spoke to his friend afterwards and they sought a solution together to put an end to the unwarranted embarrassment from the micro loan company.
What lawyers say
Adaeze Olise, a legal practitioner who spoke to Saturday Sun, said that the Central Bank of Nigeria (CBN) should step up and come up with policies that would deter these micro loan companies from harassing and infringing on the privacy of Nigerians.
According to Olise, “the truth is we actually do not have a concrete regulation that regulates their overall activity. There are ways prescribed by law to recover debts, and it doesn’t prescribe intimidation and harassment.”
Olise noted that having access to contacts and texting third parties who were unaware that the supposed debtor borrowed money was a breach of someone’s data privacy.
“The CBN needs to start regulating the operations of these micro loan companies. Or else, they could harm someone with the amount of data at their disposal,” Olise added.
Olise stated that these soft loan companies were damaging the reputation and relationships that their clients had built over the years. In her words, when a person is labelled a criminal and a fraudster, and you send the message to everybody on the person’s contact list, the person’s reputation is being destroyed.
“Some people have lost contracts, good will, jobs and business deals when their partners and clients receive such messages. And you know many Nigerians are judgemental; they may not even want to listen to the person’s explanations as they stop relating with them,” she said.
Another lawyer, Mr. Henry Onemu condemned the manner with which these soft loan companies handle debt recovery without consequences in Nigeria. According to him, they should use legally recognized means to recover their loans rather than harassing and tarnishing the image of their clients.
Onemu said: “These loan companies are supposed to explore means of getting their money back by sending a letter of demand to the debtors since they have their home addresses. And when the debtor doesn’t pay up after the stipulated, they can now go to court to recover their debts.”
He added that sending messages to people who know nothing about the transaction and loan application was wrong. In his view, such people shouldn’t be harassed and the debtors shouldn’t be defamed either in the process of recovering their debts.
“The fact that someone takes a loan and defaults to pay back doesn’t make the person a criminal. Taking a loan is a civil transaction. The law of contract binding on both parties provides for damages where there is a breach of contract, but that shouldn’t include getting third parties involved who know nothing about the transaction,” Onemu added.
Companies only exist online, no office address
It is difficult to locate the offices of these soft loan companies because most of them only operate online. As a digital business, they have their terms of agreement for loan applications on their websites or on their apps available on Google Play store.
During Saturday Sun investigation, many of these soft loan companies popped up on Google ads and on Google play store. What it means is that Nigerians are just some clicks away from getting loans without collateral.
The reporter discovered that some of the firms are not on the list of fintechs or micro-finance firms licensed by the Central Bank of Nigeria to engage in such financial services. Some others have also been sanctioned by the regulatory agencies for certain infractions.
For instance, last August, the National Information and Technology Development Agency (NITDA) fined one of the micro-finance firms N10 million for harassing its customers and those on their contacts list with threat messages, which constitutes an invasion of their privacy invasion.
When Saturday Sun correspondent called the numbers displayed on some of the micro loan apps to speak to the directors of these companies and ask them why they give out loans to different people without collateral, the customer service representatives declined to give out the numbers of their directors.
According to them, the companies operate online and all the details about applying, receiving and paying back loans are available when their apps are downloaded from Google Play store. They said the defaulters should get ready for more messages from them to their contacts.
One of the representatives, who spoke to Saturday Sun, stated that the companies don’t need collateral to give out soft loans because during registration for the app, clients fill out online forms which include stating their phone numbers, home address, BVN details and bank account details.
According to the male representative who initially gave out his name as Muyiwa, technology has made it easy to track defaulters with the details they made available on the app. He said the defaulters can be tracked to their houses or through their bank details.