To curtail predatory lending practices and protect users, Google has introduced new restrictions for digital loan applications on its Google Play Store platform. This directive comes just after the Federal Government of Nigeria licensed 117 digital loan apps to serve Nigerians. According to TechCrunch, the tech giant’s new policy comes into effect on May 31, 2023 and will prohibit apps from accessing sensitive user data such as photos, videos, contacts, precise location data, and call logs.
In a press statement, Google explained that the new policy is aimed at addressing issues of misuse of personal data by some loan apps. According to the statement, “Apps that provide personal loans, or have the primary purpose of facilitating access to personal loans (i.e., lead generators or facilitators), are prohibited from accessing sensitive data, such as photos and contacts.” The policy applies to applications which offer loans directly, lead generators, and those who connect customers with third-party lenders.
Google gives specific instructions for Nigerian digital loan apps.
In addition to the general directive, the company has also set specific instructions for loan apps operating in Nigeria and asked all such apps in its Play Store to ensure they meet the regulatory requirements. Essentially, according to the message, to operate as a Personal Loan App in Nigeria, it is mandatory for Digital Money Lenders (DML) to comply with the limited Interim Regulatory/Registration Framework and Guidelines for Digital Lending, 2022 (as may be amended from time to time) set by the Federal Competition and Consumer Protection Commission (FCCPC) of Nigeria.
The message also says that DMLs must furnish verifiable approval letters which were obtained from the FCCPC. On the other hand, Loan Aggregators are mandated to provide certification and documentation for their digital lending services and the contact information for every partnered DML. Also, these loan apps must submit upon request by Google Play any supplementary information or documents to demonstrate their compliance with the regulatory and licensing requirements that are applicable to their operations.
Illegal activities of online loan apps in Nigeria frustrating.
The Federal Government has been making attempts to regulate the operations of digital loan apps in Nigeria. This has been through the FCCPC. Investigations and raids have been carried out and some of these apps were shut down. In March 2022, the FCCPC raided at least seven digital loan companies that were operating in Lagos for possible violation of consumer rights. FCCPC’s boss, Babatunde Irukera, led the operation in response to several complaints of malpractice sent in by users of these loan apps.
Many users have taken to social media to decry the illegal means that these loan apps employ to recover their money. At the point of registration, these apps gain access to the borrower’s contacts and gallery videos and pictures. When the person defaults a loan, these pieces of information are used to blackmail them. Some of these include: sending a WhatsApp broadcast to their contacts branding them as criminals and fraudsters, calling their contacts, and even posting their pictures online as fugitives.
Customers have complained of being defrauded.
Some of the users of the loan apps have reported that their accounts were credited with an amount way lower than they requested, but they were still required to pay the full amount. For instance, a user reported that he was credited with just N5,000 out of the N10,000 that they put in for. Yet, when the time to pay back the loan arrived, they were mandated to pay back the N10,000. Others have also reported exorbitant loan interest rates, harassment even when the due date has not arrived, and threats of releasing their contact information. In light of this, the regulations are just in time.