Loan Sharks: Relief as FCCPC, ICPC, others shut illegal moneylending firms over consumer privacy violation

*The Federal Competition Consumer Protection Commission discloses the majority of the moneylending firms are operating illegally without registrations with the Corporate Affairs Commission and Central Bank of Nigeria to conduct financial business in the country

Isola Moses | ConsumerConnect

Sequel to the regulators’ earlier assurance to tackle the fraudulent moneylenders causing pains, anguish to several loan borrowers in the Nigerian economy, the Federal Competition Consumer Protection Commission (FCCPC) in conjunction with the Independent Corrupt Practices Commission and Other Related Offences Commission (ICPC) and National Information Technology Development Agency (NITAD) has raided and sealed off offices of some online loan platforms, located in Lagos, over consumer rights abuse.

ConsumerConnect reports the regulatory agencies, with the support of law enforcement agents Friday, March 11, 2022, clamped down on some of the illegal loan sharks, including GoCash, Okash, EasyCredit, Kashkash, Speedy Choice and Easy Moni in the Opebi area of Ikeja, Lagos.

Mr. Babatunde Irukera, Executive Vice-Chairman and CEO of FCCPC (middle) during the raid on some illegal loan sharks in Lagos

In his remarks during the exercise, Mr. Babatunde Irukera, Executive Vice-Chairman and Chief Executive Officer (EVC/CEO) of FCCPC, said that the growing number of consumer complaints on the activities of loan application platforms in relation to privacy infringement and high interest rates informed the FCCPC’s decision to activate the latest raid.

The Commission explained that consumers of financial products and services had accused the online financial firms of violating their privacy in their debt recovery drive.

Irukera related a situation whereby loan application platforms send names and pictures of loan defaulters to all their telephone contacts without recourse to due process and in a manner that suggests naming and shaming will no longer be tolerated in Nigeria.

COVID-19 and upsurge in loan applications

Regarding how such firms’ facilitated their illegal operations in the country’s economy recently, the FCCPC Chief Executive said during the COVID-19 lockdowns and attendant socio-economic dislocations, several households actually needed soft loans. Hence the need to secure loans became expedient, and consumers patronised them, he noted.

The FCCPC EVC/CEO stated: “Some time ago, when the country was on lockdowns in 2020 due to the pandemic, we started seeing the rise in moneylenders.

“Because there was a lockdown due to the pandemic, people needed small easy loan which is understandable.

“But over a period of time, people started complaining about the malpractices of the lenders, so we started tracking it.”

Legal status of loan firms in Nigeria

The regulators, however, lamented that majority of the loan companies are operating illegally, with no registrations with the Corporate Affairs Commission (CAC) and Central Bank of Nigeria (CBN) to carry out the business of financial transactions in the country.

The FCCPC boss, however, said investigations revealed that the loan firms were neither Nigerian companies nor registered in the country.

Irukera disclosed: “We found out that most of these companies operate from the same place.

“We also found out that many of them are actually operated by the same person.

“They are not Nigerian companies; they don’t have an address in Nigeria and they are not registered in Nigeria with the Corporate Affairs Commission, and they do not have any licence to do their business.”

How regulators investigated firms’ operations since 2020

Irukera further disclosed that investigations into the allegations against some of the loan firm’s started since 2020.

“This information started quite a while ago,” said he.

Irukera also disclosed that the regulatory Commission had been monitoring activities of the firms for several months before the clampdown.

He said: “Towards the end of last year, we gathered quite a lot of information.

“We started working with some other key agencies, and the FCCPC led the meeting where we all agreed there would be a joint effort to look into these businesses.”

According to him, it was difficult to identify their operational bases in Nigeria.

“We started an investigation trying to determine the location of these firms.

“That has been a very difficult thing. We did that for several months and some of them have moved from one place to the another and we have been visiting these places for months,” he noted.

Loan sharks’ mode of operations

According to Irukera, the interest rates charged by the illegal online financial firms appear to violate the ethics of how lending is done.

He stated: “The two key things that were subject of concern were what seemed to be the naming and shaming violation of people’s privacy with respect to how these lenders recover their loans.

“The interest rate seems to be a violation of the ethics on how lending is done.

“So, those were the two things that we set out to look for.”

The regulators’ move to conduct the ‘sting operation’

Irukera further said that FCCPC had written to global app companies, requesting them to suspend the operations of the online banks.

“Essentially, what they have is an app, and so we started gathering more information about them. “We engaged the public and the people who had been their victims. They gave us more information,” he stated.

The FCCPC Chief as well noted: “As we got more information we had enough evidence to convince the court to issue a warrant for us to proceed with an investigation into a search and seizure.

“And sometime last month, a court issued a warrant and between then and now, we were preparing a sting operation which is what you are seeing here today. “The reason for this is because we wanted to be sure we are hitting at the place we could get many of them.”

According to him, “we also understand that they are between five and seven companies operating at the same location.”

The FCCPC and other agencies involved in the raid seized some working equipment, including laptops, during the raid for further investigation into the firms’ illicit operations.

Big Techs requested to remove firms’ apps, banks to close accounts

Meanwhile, Irukera has said aside from Friday’s raid on some of the firms’, the FCCPC has also issued multiple orders to limit their illegal operations.

He stated: “Two of them are going to vendors: Apple and Google stores where some of these apps are available.

“We have asked them to shut these companies’ apps down so that people will not be victimised anymore.

“Some of them (the orders) have gone to the banks, asking them to freeze the accounts used by these people (moneylenders).

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