Nigeria’s digital lending market, known for its easy access to loans through mobile apps, is under fire for breaching customer privacy. The Nigeria Data Protection Commission (NDPC) is currently investigating over 400 cases where lenders accessed borrowers’ contacts, pictures, and messages without permission.
These practices violate the Nigeria Data Protection Act (NDPA) of 2023. The NDPC is seeking to restrict or ban phone numbers used by lenders for such breaches. Its report highlights that “loan apps are overly intrusive” and have continued to collect unnecessary data despite last year’s Google policy change.
The NDPC acknowledges the widespread nature of the issue and is working on a multi-pronged approach:
- Collaboration: The NDPC is teaming up with other regulators and third-party platforms to prevent future breaches. This includes requiring platforms to deny access to lenders who misuse data.
- New Regulations: The NDPC is drafting the NDPA-GAID directive to address data ethics and hold third-party platforms accountable for breaches.
- Sanctions: The NDPC is working with the FCCPC to ensure lenders obtain data protection clearance before operating.
Consumer Rights Group Calls for Action
Citizens’ Gavel, a consumer rights organisation, has urged the FCCPC to crack down on unlicensed lenders. In a statement, its legal lead, Funmi Oderinde, revealed the NGO received over 600 complaints from loan app users who have been defamed. Her team has also identified over 70 problematic loan apps linked to more than 30 digital lending companies. These complaints detail a disturbing pattern of harassment, defamation, and even death threats used to collect debts.
While the FCCPC introduced regulations in 2022 and claims an 80% reduction in harassment cases, the NDPC acknowledges the problem persists. The FCCPC plans to introduce new regulations to address debt recovery practices.
A Broken System?
The existing regulations, with an alleged 80% reduction in harassment, seem to be failing. The problem lies partly in the ease with which unlicensed lenders operate. Citizens’ Gavel’s identification of over 30 such companies highlights the regulatory loopholes. Furthermore, the continued data collection practices despite policy changes raise questions about enforcement mechanisms.
The Road Ahead
The NDPC’s multi-pronged approach, including collaboration and stricter regulations, offers a glimmer of hope. However, a successful solution requires a more holistic approach. Financial literacy campaigns can help borrowers understand loan terms and red flags. Additionally, increased collaboration between the NDPC, FCCPC, and app stores is crucial to weed out unscrupulous lenders and enforce data protection laws.
