As more Nigerians turn to mobile loan applications to get quick cash, concerns are growing over how some digital lenders handle borrowers’ personal information, with complaints of alleged harassment, threats and messages sent to family members and friends over unpaid debts.
Getting a loan in Nigeria has become easier with the growth of digital lending platforms. With a smartphone, an internet connection and a few personal details, Nigerians can apply for loans without visiting a bank or going through lengthy paperwork.
For people dealing with emergencies, unpaid bills or other financial challenges, these applications offer a quick way to access money.
However, behind the convenience of getting loans within minutes, questions are being raised about how some of these platforms collect and use customers’ personal information.
Some borrowers have accused loan recovery agents of going beyond normal debt collection by contacting their friends, relatives and other people whose numbers are saved on their phones.
In some complaints shared online, borrowers have alleged that their private financial situations were exposed to people around them after they failed to repay loans on time.
Others have complained about receiving repeated calls, threatening messages and embarrassing communications from debt recovery agents.
These complaints have raised concerns about whether some digital lenders are using borrowers’ personal information as a tool to pressure them into repaying their debts.
What information do loan apps collect?
When people download and register on some loan applications, they are sometimes asked to grant access to certain features on their smartphones.
Depending on the application, these permissions may include access to contacts, location, camera, photographs and other information.
While some of these permissions may be needed to provide particular services, users do not always understand why an application needs access to certain information.
The major concern is what happens to the information after it has been collected.
Who has access to it? How is it stored? Can it be shared with another company? And what happens when a borrower fails to repay a loan?
These are questions many customers may not consider when they urgently need money.
When debt recovery becomes harassment
For some borrowers, the problem reportedly begins when they miss their repayment deadline.
Rather than limiting communication to the borrower, some recovery agents have been accused of reaching out to people in their contact lists to demand payment.
This can put borrowers in uncomfortable situations, especially when friends, colleagues, employers or family members suddenly receive messages about their outstanding loans.
Imagine borrowing money to settle an emergency, missing the repayment date because of financial difficulties and then discovering that people close to you have been contacted about your debt.
For borrowers who have experienced such situations, the issue goes beyond owing money. It becomes a question of privacy, dignity and how far a lending company can go to recover its money.
Although lending companies have the right to demand repayment of legitimate debts, that right does not give them unlimited permission to threaten, embarrass or expose customers.
What does Nigerian law say?
The Nigeria Data Protection Act 2023 provides a legal framework for protecting the personal information of Nigerians.
The law places responsibilities on organisations that collect and process personal data, including requirements relating to lawful processing, transparency, security and respect for individuals’ privacy rights.
This means that the fact that a customer has downloaded a loan application does not automatically give the company unlimited control over that person’s information.
The Federal Competition and Consumer Protection Commission (FCCPC) also oversees digital lending operations in Nigeria and has taken steps to address concerns surrounding abusive lending practices and debt recovery.
Borrowers who believe their information has been misused or who have experienced abusive debt recovery practices can report their complaints to the relevant regulatory authorities.
Why Nigerians should be careful
Financial experts and consumer protection advocates have repeatedly stressed the importance of understanding the terms and conditions of digital financial services before using them.
Before downloading a loan application, users should check its privacy policy, repayment conditions, interest rates and the permissions it requests.
They should also be careful about granting access to information that may not be necessary for the service they want to use.
Anyone who experiences alleged harassment should keep evidence, including text messages, screenshots, call records and other communications that may help when submitting a complaint.
The bigger concern
As digital lending continues to grow in Nigeria, mobile loan applications are becoming an important part of the country’s financial technology industry.
However, the growth of the sector also raises questions about how customers can be protected from possible misuse of their personal information.
For many Nigerians, getting a quick loan may solve an immediate financial problem. But the experience can become distressing if the process of recovering the money involves exposing their private information.
The question is no longer just how quickly Nigerians can get loans through their phones, but also how safely their personal information is handled after they sign up.
As more people turn to digital lenders for financial assistance, who is protecting their privacy when things go wrong?