Representatives investigate illegal fintech, loan apps threaten debtors

The House of Representatives has voted to investigate the activities of illegal financial technology companies and mobile lenders that threaten debtors to default on loans.

At the plenary session on Thursday, the House gave a mandate to the Committee on Banking and Currency; Financial crime; and Telecommunications to “investigate the alleged sharp practices and abuses of FinTech and online mobile digital loan apps and companies in Nigeria and report within four weeks.”

The resolution was based on the unanimous adoption 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 condemned the proliferation of online loan apps across Nigeria “by some fraudulent and unscrupulous profiteers who affect many low-income Nigerians, who are forced to borrow and are caught in the web of fake loan apps hosted on the Google Play Store by individuals and companies to defraud . the low-income earners.”

The lawmaker noted that the COVID-19 pandemic affected many economies, including Nigeria, as jobs were lost and incomes were affected due to shutdowns, restrictions on movement and face-to-face interactions. He added that these factors accelerated the digitization of financial services and “the infiltration of some unscrupulous and unregulated financial services operators.”

He said: “The House is alarmed that these predatory lending apps are disguised as platforms where unsuspecting members of the public are promised access to quick loans with no collateral other than providing a bank verification number.

“The House is also concerned that such victims are expected to repay loans at astronomical interest rates within three to seven days, as opposed to the 91 to 365 days requirement on the Google Play store, which has over 83.07 percent market share in Nigeria.”

Satomi further noted that most of these loan apps or companies and individuals operate without government regulation, expired licenses and in some cases without licensing.

According to him, searches on the registration status of loan apps in Nigeria by the Corporate Affairs Commission show that the founders of such apps or companies were foreign nationals without the necessary license to operate the volume of financial transactions and were operating illegally in the country.

He said: “The House is concerned about the operations of Kash Kash, with a hosted operating account under the name of Super Car Universal Limited with a certain commercial bank in Nigeria, where Kash Kash is carrying out activities for the loan app, such as the exorbitant interest they collected from customers and defamatory messages sent to contacts of their customers when they missed the repayment date.

“The House is also concerned that one such account holder did not have the necessary license to operate as a moneylender, which led the commercial bank to close the first account, but such operations were moved to another account called Speedy Choice which is still operating and managed by the same people who managed the previous account.

– The House is again concerned that many of such online loan apps operating in Nigeria, which disburse loans to customers without 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 illegal financial flows .

“The house is hurt that these unregulated Nigerian fintech companies are shaming, threatening customers for late payment of loans.”

The lawmaker therefore 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, CashMe , LoanMe, LifePurse iLoanPro, LairaPlus, OxLoan and NoNowMoney.”