The rise of online lenders on the back of tough loan conditions imposed by commercial banks has brought relief to thousands of borrowers. However, unconventional loan recovery tactics deployed against defaulting borrowers by unprofessional online lenders have brought untold pains and emotional trauma to many Nigerians, NIKE POPOOLA reports
Online lenders have become part and parcel of the nation’s banking system especially in recent years when tough economic conditions have made many to resort to borrowing from soft loan firms.
Tough loan conditions imposed by commercial banks had made the activities of online banks more popular over time.
Interestingly, the use of technology and their ability to advance loans to prospective customers without collecting any form of collateral have made online banks the delight of many Nigerians.
Some of the online lenders give soft loans within a relatively short period of time and this has made them attractive to thousands of borrowers.
However, scores of unprofessional online lenders have in recent years deployed very crooked and illegal means to recover loans from those they describe as recalcitrant debtors. Sometimes, they employ crude and illegal means to embarrass clients who fail to repay their loans after few days.
Sadly, these illegal and unconventional methods have often come with huge collateral damage to the integrity and character of the borrowers, with some customers developing emotional problems after such encounters.
The public image of many desperate borrowers has been tarnished after borrowing ridiculously low amounts of money from online lenders.
Many of the borrowers never envisaged the aftermath of their decision to patronise some unprofessional online lenders
Recently, an unprofessional online lender sent a message about a friend to the WhatsApp number of our correspondent.
The message read, “Be advised! Babatunde Ajigbese with phone number 08000000000 (real name and phone contact withheld) is a chronic debtor who borrowed funds and is cunningly avoiding repayment despite several calls and messages sent to him. Do not trust such a person with funds as he/she is a financial liability and has proved to be a credit risk. We can send you the proof.”
When our correspondent contacted the accused borrower, he said he never envisaged such embarrassment from the online lender, lamenting that the same message had been sent to other contacts on his phone.
Recounting his ordeal, Ajigbese said, “I was very broke and subsequently requested loans from five close associates but none of them responded positively. To avoid the shame of having to beg or seek loans from friends, I resorted to getting credit facilities from online lender. I made the choice because I believe my integrity would be kept intact.”
“So, I went to Google Play Store and downloaded a loan app. I registered on the app. During the registration process, the app asks for access to my phone contacts and location. Once you allow this, it automatically gives the loan firm access to all your phone contacts.”
He added, “If you happen to use Google contacts, it gives another easy access to your contacts. The borrower is not the one who used his contacts as guarantors. So, once a borrower defaults in the repayment of the loan, the loan firm goes after his contacts to embarrass him.”
Ajigbese narrated how the unfortunate development affected his health and almost led to an emotional problem about three weeks later.
He said, “After the quark online lender sent defamatory messages to my contacts, I became emotionally traumatised that whenever anybody called me, I would be afraid to pick the call.
“Even if my family members called me, I would be scared of what they wanted to say. I suffered shame and depression.”
The victim said he never thought the loan firm could go to such length to defame him.
According to him, there are normal and legal procedures for handling cases of loan default and he believes reputable loan companies should follow the rules.
“In other countries, lenders report defaulters to the credit bureau. What this company was supposed to do was to report me to the credit bureau for delayed payment. This reason is to get other firms or banks not to advance any loan to me when they check my credit score. I was owing the firm N12,500 and the interest was 50 per cent. For example, if you borrow N10,000, you will pay N15,000.”
Further findings show that many Nigerians have become victims of unprofessional online lenders, like Ajigbese.
Mr Kareem Ibrahim, a teacher, is another victim whose online lender sent a similar message to his contacts.
The message read, “Notice: Be more careful with your monetary dealings with Kareem Ibrahim 0802*******, wife 0802**”**. He is indebted to a company and refused to pay, deliberately avoiding calls and exhibiting all forms of dubiousness. In a short while, severe consequences will be upon him. Warn him.”
When the accused borrower was contacted by our correspondent, he simply replied, “Very unfortunate, the situation is being addressed.”
Most loans are not significant
According to finding, the loan sharks hardly lend significant amounts to victims.
They embarrassed defaulters for loans not up to N5,000 in some instances.
The unprofessional lenders often deploy crude methods to recover their funds by sending defamatory messages to the borrowers’ friends, employers, business associates, among others who are on the contact list.
An engineer, Mr James Kunle, had received a message on his phone.
The message read, “This is to inform you that your relative/friend-Ji***ab Su***bn-with phone number *080*** 04*** and BVN 22*****578 is a deceitful person. This person has proved to be ruthless/chronic and unremorseful. Between now and 6pm today, your details and that of the person will be published for aiding and abetting a fraudster.
“Note: He has refused to repay the loan. He also refused to pick calls and respond to messages. Your details appeared as an emergency contact. If you are not aware about this, you can as well call the person now to delete your information on the app now. We wait for your response from the person.”
Kunle said he did not know when the borrower sought and got the loan, neither was he contacted to be his guarantor.
He called the quark online lender and he was asked to tell the borrower to repay his loans or remove his name from the contact list.
When Kunle contacted the borrower, he narrated his experience.
He said, “I obtained N20,000 loan and I have since repaid. Unfortunately, I paid a few days late because my phone was missing and I could not access the app on time.
“It is appalling that a company or a financial institution could descend so low to this extent. And after tarnishing your image, you will still have to pay back. Very sad.”
How tough lending conditions by commercial banks fuel online lending
The inability of poor Nigerians to access loans from licensed banks has forced many Nigerians to become the victims of loan sharks.
The Central Bank of Nigeria had in 2010 repealed the universal banking model and ordered banks to divest from non-banking businesses.
This followed the CBN’s discovery that banks were investing a substantial part of depositors’ funds in more profitable businesses at the expense of their primary mandate of lending to the public.
Also, in 2018, the CBN introduced a stringent loan-to-deposit-ratio policy to force banks to channel certain percentage of their deposits to lending to the public.
This is aimed at making adequate amount of credit accessible to householders and other small and medium-scale enterprises.
However, experts believe a robust credit system will serve as a booster to economic activities, reduce unemployment and poverty.
A former President, National Association of Nigerian Accountants, Dr Sam Nzekwe, said online lenders were taking advantage of the lapses in the banking sector because loan accessibility had become difficult for many Nigerians.
He also regretted a situation where some borrowers took loans without putting adequate repayment plans in place.
Nzekwe said, “Those who take loans from such a system must be prepared to pay back because someone who gives out money must be ready to repay.
“Some people will borrow short-term funds for long-term business. If you don’t know what to do with the money, don’t borrow. You need to know when to borrow and when not to borrow.”
Activities of loan sharks
Presently, there are numerous unregulated loan apps on the Goggle Play Store feasting on unsuspecting Nigerians, according to findings by our correspondent.
A number of the loan sharks are registered with the Corporate Affairs Commission but with fake addresses. They often do these to entice unsuspecting borrowers.
Yemisi Balogun, a Lagos trader, narrated how she was approached to borrow from one of the online lenders.
