The House of Representatives has decided to probe the activities of illegal financial technology companies and mobile application lenders, who threaten debtors for failing to meet up with loan payment deadlines.
At the meeting on Thursday, the House ordered 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.”
This decision was made unanimously as a result of a motion of urgent public importance moved by a member of the House, Ahmed Satomi, titled ‘Urgent Need to Investigate Sharp Practices by Unregulated Online Fintech Lending Companies and Abuse of Mobile Digital Loan Apps in Nigeria.’
Satomi criticized the rapid increase of these online loan apps across Nigeria “by some fraudulent and unscrupulous profiteers 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.”
He further noted that since the COVID-19 pandemic, Nigeria’s economy has been affected, jobs were lost and incomes were affected due to lockdown and restrictions on movement and face-to-face interactions. He said these factors contributed to the fast growth of digitalization of financial services and “the infiltration of some unscrupulous and unregulated financial service operators.
“The House is 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 the provision of a Bank Verification Number.
“The House is also disturbed that such victims are expected to repay loans at astronomical interest rates within three to seven days, as against the 91 to 365 days claim on Google Play store, which has over 83.07 per cent market share in Nigeria.”
Satomi added that most of these loan apps or companies and individuals operate with expired licenses or no licensing at all. He stated that research on the registration status of the loan apps in Nigeria from the Corporate Affairs Commission show that the owners of these loan apps are foreign nationals who illegally operate without the required license for the volume of financial transactions.
The lawmaker said, “The House is worried 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.
“The House is also worried that such an account holder did not have the required license 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.
“The House is again worried 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.
“The House is pained that these unregulated Nigerian fintech companies’ shame, threaten customers for late payment of loans.”
Meanwhile, the lawmaker, urged the House to investigate the activities of these fintech companies including OKash, Opay, 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.”