NITDA fines Soko Loans N10 million for invasion of privacy and undermining the digital economy
NITDA fines Soko Loans N10 million for invasion of privacy and undermining the digital economy
The National Information Technology Development Agency (NITDA) has fined Soko Loans N10 million for a variety of infractions against its users, including invasion of privacy and "erosion of trust in the digital economy."
This came after a series of complaints against the loan app for unauthorized disclosures, a failure to protect customers' personal information, and character defamation.
According to Hadiza Umar, NITDA's spokesperson, the company also failed to exercise due diligence as required by the Nigerian Data Protection Regulation (NDPR).
She stated that the agency initiated investigations as part of its due diligence process following a complaint filed in November by Bloomgate Solicitors on behalf of a client.
According to Umar, investigations revealed that Soko Lending Company provides loans to customers without requiring collateral. It does, however, require them to download one of the lending company's mobile apps, which grants the lending company access to their phone contacts.
Additionally, the app activates a direct debit feature, which enables the company to deduct funds directly from the loanee's account on the agreed-upon repayment date. However, when the loanee defaulted on repayment due to an insufficient balance, the company began sending contacts privacy-invading messages.
According to the NITDA spokesperson, investigations revealed that the contacts to whom the messages were sent were unaware of the loan because they were not parties to the transactions and had not consented to their data being processed.
She also accused Soko Loans of embedding trackers in its mobile app that share customer data with third parties. These trackers were installed without the users' knowledge or consent and without following the proper legal channels.
In light of its findings, the NITDA levied a N10 million fine against Soko Loans for violating Nigerians' privacy and undermining trust in the digital economy.
Not the only ones
However, Soko Loans is not the only online lender engaging in this practice. Almost every loan app and microlending company employs this strategy as a primary means of ensuring repayment. This is because one of their primary selling points is their ability to make loans without requiring collateral.
Without collateral, they were forced to devise alternate methods of recouping their losses. Obtaining access to contact lists and sending messages that many customers have described as 'defamatory' has become a widely accepted strategy for them, despite its unconventional nature.
It is not yet clear whether the loanee's contract with the loan apps includes an agreement to the loanee's invasion of privacy. However, the majority of recipients of the offensive messages did not sign up for them.
However, with their primary strategy under fire by the NITDA, it remains to be seen whether this will prompt loan apps to shift their focus to more conventional and less intrusive methods of recovering their money.
