The Federal Competition and Consumer Protection Commission (FCCPC) of Nigeria has taken decisive action against 18 digital money lending firms (DMLs) operating on Google’s Play Store for violating registration regulations.
This crackdown comes in response to reports of illegal debt recovery tactics used by some operators, prompting the FCCPC to take action and protect consumers.
The apps found in violation include Getloan, Camelloan, Cashlawn, Nairaloan, Eaglecash, Moneytreefinance Made Easy, Luckyloan Personal Loan, Joy Cash-Loan, Cashme, Easynaira, Swiftcash, Crediting, Swiftkash, Hen Credit loan; Nut loan; Cash door; Cashpal, and Nairaeasy gist loan.
Although these businesses were initially registered, the FCCPC now demands that they comply with the 2022 interim regulatory/registration framework and rules for digital lending. The commission has given the affected DMLs five days to furnish evidence of their conformity.
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Unethical Practices Leading to Action
The FCCPC’s decision to act was driven by certain DML operators resorting to the use of illegal debt recovery techniques. In response, the commission ordered Google to remove the offending apps from the Play Store and halt payment services to the implicated businesses.
As part of its ongoing investigation and audit, the FCCPC identified additional apps that either lack regulatory approval or violate the guidelines. Consequently, the commission has requested Google to promptly remove, withdraw, or draw down these non-compliant apps as well.
Some DMLs may be using Android package kits (APK) file formats to reach customers outside of Google’s Play Store and circumvent regulatory compliance. The FCCPC has clarified that compliance with the guidelines is mandatory for all DMLs, regardless of their distribution method or platform.
Consequences of offence on the public
The offences committed by the 18 digital money lending firms (DMLs) can have significant consequences on the public:
Consumer Financial Risk: Violations of registration regulations may indicate a lack of proper oversight and due diligence in the lending process. This can expose consumers to potential financial risks, as these unregistered apps may not follow appropriate lending practices or adhere to consumer protection laws.
Illegal Debt Recovery Tactics: The use of illegal debt recovery tactics can harm borrowers and lead to harassment, intimidation, and unfair practices. This can cause stress and anxiety among consumers who are unable to meet their loan obligations, potentially leading to a cycle of debt and financial instability.
Data Privacy and Security Concerns: Non-compliant apps may not have adequate data privacy and security measures in place, putting users’ personal and financial information at risk. This could lead to identity theft, fraud, or misuse of sensitive data, jeopardizing the privacy and financial security of the public.
Loss of Trust: Instances of non-compliance and unethical practices erode trust in digital lending platforms and the broader financial technology industry. Public confidence in digital lending services may diminish, leading to reduced adoption and usage of legitimate and compliant apps.
Financial Losses: Consumers who use these non-compliant apps may face hidden fees, exorbitant interest rates, or unfair loan terms. This can result in financial losses for borrowers who are already vulnerable and seeking access to quick funds.
Negative Impact on the Industry: The actions of these 18 DMLs can tarnish the reputation of the entire digital lending industry in Nigeria. It may lead to increased scrutiny from regulators and make it harder for legitimate digital lending platforms to operate and gain the public’s trust.
Legal Consequences: For the offending DMLs, there are potential legal consequences such as fines, penalties, or even criminal charges if their actions are deemed fraudulent or malicious. This can result in financial losses for the companies involved and may also impact their ability to continue operations.
To protect the public and ensure a fair and safe financial environment, regulatory bodies like the FCCPC has decided to take action against non-compliant apps and enforce regulations that safeguard consumers from unethical practices in the digital lending space.
Consequences for Non-Compliance with Consumer Protection
DMLs currently operating on the Play Store and utilizing APK file formats must prove that their operations are legal. Failure to comply with the guidelines renders their operations illegal. Non-compliant companies face permanent delisting, bans, and potential law enforcement actions, including prosecution.
Nigeria’s FCCPC remains committed to safeguarding consumers and ensuring that digital lending apps adhere to regulatory standards. By demanding compliance and swift action from Google, the commission aims to create a fair and secure environment for users of digital lending services.