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Dangers of fake loan apps

By Babatunde Ayedoju

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Borrowing loan is definitely not a recent phenomenon, as people have been known to borrow both money and materials from neighbours, friends, family members and other acquaintances when the need arises.

The advent of banks took borrowing to another dimension as people, instead of borrowing from their fellow human beings, could now approach banks to obtain loans. Such loans, which would be paid back with interest, are used for various purposes such as business, education, projects and many others.

However, in the last one decade or a little bit more than that, there have emerged a new trend in loan transactions known as loan Apps.

These loan Apps are connected with financial institutions without any traceable physical location; they give loans with cheap interest rates, making their offers very enticing to unsuspecting and probably ill-informed members of the public. It is also worthy of note that such Apps give loans of very little amounts to clients, as low as ₦10,000 or even less than that.

Unfortunately, people who are unable to pay back the loans face the consequence of being embarrassed. The lenders who in the course of registration have been given access to the client’s contact list begins to send messages to as many numbers on the borrower’s contact. Some can even call some of those numbers in the process. They can also call the borrower to threaten him/her. The aim is to embarrass the person.

One of those who have fallen victim of these loan apps commonly known as loan shark is Vera, a lady in her 30s, said that a staff of the loan agency went as far as calling her on phone and raining curses on her. She added that she was so infuriated that she had to curse the person in return and vowed not to pay back the money because of the way she was embarrassed.

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Another person, Joseph, a young man also in his 30s, said a loan shark called telling him that his sister borrowed a loan without paying, and they threatened to block the borrower’s bank verification number (BVN) if she failed to pay back the loan. He said that he simply ignored the caller.

Some of the notorious loan apps known to have operated in Nigeria at various points in time include ChaCha, Easy Moni, EasyCredit, GoCash, Here4U, Kashkash, Maxi Credit, Okash, SoftPay, Sokoloan, and Speedy Choice, though the list is endless.

Obviously, the activities of these organisations have gotten to the ears of the Federal Government as steps have been taken in the past to confront them. For example, it would be recalled that the President Bola Ahmed Tinubu administration recently muted the idea of a student loan. Last month, the Nigerian Education Loan Fund warned students and the general public to be cautious of fraudulent loan websites that posed as legitimate loan providers.

In a statement released by the organisation’s Head of Media and Public Relations, Nasir Ayitogo, which was seen on X (previously Twitter), the federal government agency clarified that it was not associated with fraudulent websites and advised people to verify any loan offers by contacting it directly through its official channels.

According to the fund, the official NELFUND website, where applications for the genuine student loan set up by the Federal Government will be accepted in the future, is www.nelf.gov.ng.

It noted that fraudsters operating the website www.fedstudyloan-gov.ng had advertised an application for the highly anticipated student loan programme of the Federal Government.

Likewise, early this month, The acting Chairman of Federal Competition and Consumer Protection Commission (FCCPC), Adamu Abdullahi, vowed that the activities of loan sharks in Nigeria would become history.

Abdullahi, in a statement posted on the Commission’s X page revealed that the activities of those loan sharks had caused embarrassment for many Nigerians, with some even losing their jobs.

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His words: “We do not agree with that kind of practice because customers are being harassed, even though it’s not directly our problem. We have involved CBN, NITDA, EFCC, and the Human Rights Commission to form a committee to address the issue.

“Since we found out that they operate online and have no physical offices or managing directors, we approached Google and Apple stores to take down all their Apps. We also coordinated with the CBN to block all their accounts.”

While stating that the Commission had issued warnings to the loan sharks, Adamu added that his agency would not hesitate to block them if their illegal activities persisted.

Experts attributed the menace of these loan sharks to the accessibility of the loan apps and the poor state of the economy.

Dr Bayo Fasunwon from the Department of Political Science, Adekunle Ajasin University, Akungba-Akoko, pointed out that the loan apps are very easy for Nigerians, most of who have no bank accounts, to access.

He added that the loan apps gives loans of very little amounts to Nigerians, especially in a time like these when the state of the economy makes it seemingly inevitable for many to survive on loans.

“Likewise, our banking system has not really developed to the point of catering for the welfare of the masses,” he added.

Dr Fasunwon noted that to control the activities of these loan sharks, the first thing for the government to do is to register them, so that people will know the ones that are real and the ones that are genuine, adding that the loan apps must have addresses through which they can be traced.

He said, “The easiest way to control the existence of another organisation is to make sure the one on ground can do the same thing that the alternative is doing. If our banks can give small loan like the ones that these sharks are doing and understand that a loan of ₦20,000 goes a long way in the lives of people, there will be an improvement in the situation.”

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The doctor of political economy added that if the government does not take steps against the loan sharks on time, they will continue to embarrass people by disclosing sensitive information that can be used against them and this will affect the psychology of the borrowers. He added that conventional banks will also continue to lose customers.

Above all, he said that the government through CBN should let the public know the original ones and the fake.

Likewise,  to Dr Chris Ofonyelu from the Department of Economics, Adekunle Ajasin University, Akungba-Akoko, said that the loan conditions of the loan apps are very easy, such that someone who is financially trapped can get a quick fix. According to him,  the fact that the apps operate online makes them easy to access.

He said, “The economy is not smiling. So people will always have a need to borrow. Moreso, the kinds of banks we have now don’t relate much with their customers. So, people want to be relating more with these online apps more than the conventional banks.”

Dr Ofonyelu, who pointed out that the current generation of youths are lazy and want things for free, making them quick to jump at the kind of offer presented by the loan apps, advised that people who want to take loans online should endeavour to seek information first and listen to stories of people who have fallen victim in the past before taking such a step.

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