Loan Sharks Have Been Ordered To Stop Compounding Interest
Loan sharks have been ordered to stop compounding interest by Babatunde Irukera of the Federal Competition and Consumer Protection Commission (FCCPC)
Babatunde Irukera, the FCCPC's Vice-Chairman and Chief Executive Officer, has directed that loan applications no longer accrue compound interest.
These loan apps, also known as loan sharks, have been posting disparaging messages about defaulters on the internet| Many Nigerians claim to have collected the loans during the pandemic shutdown, which the Joint Task Force raided last week in their Ikeja offices.
Babatunde Irukera, the Vice-Chairman and Chief Executive Officer of the Federal Competition and Consumer Protection Commission (FCCPC), has remained laser-focused on destroying the backbone of loan sharks, the loan apps that are notorious for harassing defaulters both online and offline.
In a new round of sanctions against them, he ordered them to stop compounding interest on loans and loan collection practices while the Joint Task Force — which includes the FCCPC, the Independent Corrupt Practices and Related Offences Commission (ICPC), the Economic and Financial Crimes Commission (EFCC), the National Information and Technology Development Agency (NITDA), the National Human Rights Commission (NHRC), and the Central Bank of Nigeria (CBN) — conducted a thorough investigation.
In a statement signed by Irukera, the commission stated that it would prosecute violators "to the fullest extent of the law" if necessary.
As the commission stated in a statement, "the Commission warns all businesses that were subject to regulatory intervention on Friday, March 11, 2022, to immediately cease and desist from the interest compounding and loan repayment/collection practices that are the subject of this investigation."
Those who engage in any of the foregoing conduct, or those who provide the Commission with credible evidence of such conduct, will be subject to the full force of the law, including prosecution (with no option for administrative regulatory resolution).
The Joint Task Force has been steadfast in its efforts to limit the power of these loan application services. This past week, they raided their offices in the Nigerian city of Ikeja and seized several of their bank accounts. At the time, Irukera stated that many of these companies lacked the necessary licenses to conduct business in the country. The raid comes as a result of an investigation by a task force that began in 2020.
When loanees fail to pay back their loans on time, loan sharks are accused of sending text messages to their contacts, referring to them as "criminals" and "thieves," accusing them of taking advantage of the situation. Loan companies allegedly called some Nigerians who had been affected by this, threatening to tell their contacts that they would be forced to pay up, despite the fact that they were not guarantors of the loanee's obligations.
Additionally, loan sharks have been accused of charging exorbitant interest rates, which Irukera now claims they must stop doing as a result of the new order he has issued against them. Earlier this year, Punch reported that loan apps had sent obituaries to living debtors' phone contacts and family members in exchange for as little as 15,000 dollars in loan payments.
In 2021, the National Institute of Transnational Trade and Development (NITDA) fined Soko Loans ten million dollars for violating the privacy of a client and sending disparaging messages to that client. Despite this, these loan sharks were successful in convincing Nigerians to take out loans during the coronavirus pandemic, when it appeared as though they had no other choice than to do so.
Apple and Google were ordered by the Joint Task Force to remove the companies' apps from their respective app store catalogs.
The Joint Task Force stated that its investigation into the practices of loan apps is still active and ongoing, and that it welcomes any information that may be useful in furthering its investigation into these practices.
