House Moves to Probe Online Lenders over Sharp Practices

Paschal Emeka, Abuja

The House of Representatives has moved to investigate alleged sharp practices and abuses by fintech and online mobile digital loan apps and companies in the country.

This development followed a motion of urgent public importance moved on Thursday at plenary by Hon. Alhaji Satomi, on the urgent need to investigate sharp practices by unregulated online fintech lending companies and abuse of mobile digital loan apps in Nigeria.

Hon. Satomi in the motion noted that “the proliferation of online loan apps across Nigeria by some fraudulent and unscrupulous profiteers is affecting many low income Nigerians, who are coerced to borrow and get trapped in the web of sham loan apps hosted on Google Play Store by individuals and companies to swindle the low-income earners.

“Aware that the COVID-19 pandemic affected many economies including Nigeria as jobs were lost and incomes were affected, due to the lockdowns, restrictions on movement and face-to-face interactions sped up the pace of digitalisation of financial services and the infiltration of some unscrupulous unregulated financial service operators.

“Disturbed that these predatory lending apps are disguised as platforms where unsuspecting members of the public are promised access to quick loans with no collateral except provision of bank verification number (BVN).

“Also disturbed that such victims are expected to repay loans at astronomical interest rates within three – seven days as against the 91 to 365 days claim on Google Play store which has over 83.07% market share in Nigeria.

“Also aware that most of these loan apps or companies and individuals operate with no regulation by government, expired licences and in some cases no licences

The lawmaker was concerned that searches for the registration status of loan apps in Nigeria from the Corporate Affairs Commission (CAC) shows that founding directors of such apps or companies were foreign nationals without the required licences to operate the volume of financial transactions and illegally operating in the country.

He expressed worry about the operations of Kash Kash with a hosted operating account under the name Super Car Universal Limited with a certain commercial bank in Nigeria where Kash Kash, carries out activities of the loan app, such as the exorbitant interest rates they collected from customers and defamatory messages sent to contacts of their customers when they missed their repayment date.

He was also worried that such account holder did not have the required licence to operate as a money lender, which led the commercial bank to close the first account, but such operations were moved to another account named Speedy Choice, which is still operational and managed by the same people who managed the previous account.

Again, he informed that many of such online loan apps operating in Nigeria disbursing loans to customers with no collateral and defaulters are always sent threatening messages and that Loan apps and other fintech products can be used for money-laundering and other forms of illicit financial flows (IFF).

He was therefore, pained that these unregulated Nigerian fintech companies shame, and threaten customers for late payment of loans.

“Cognizance of the need to investigate activities of these fintech companies including OKash, PayLater, PalmCredit, Branch, QuickCheck, Aella Credit, FairMoney, KiaKia, EasyCredit, NewCredit, Umba, Carbon, FirstNell, SoftNaira, SharpCash, Newcredit, Cash Mall, NairaLand, Naira9ja, New Credit Loan App, Future Cash, SharpCredit, MoneyHub, 9jaCash, Henloan, Get Loan, Plenty Cash, Fundy, iMoneyPlus, CashCredit, LifeLine, Lumos Loan, NairaPlus, Care Finance, Cashbean, CashMe, LoanMe, LifePurse iLoanPro, LairaPlus, OxLoan and NoNowMoney.

Consequently, the House resolved to mandate the Committee on Banking and Currency, Financial Crimes and Telecommunications to investigate the alleged sharp practices and abuses by fintech and online mobile digital loan apps and companies in Nigeria and report within four weeks.

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