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Federal government to investigate alleged sharp practices and abuses by FinTech and online mobile digital lending and companies in Nigeria

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Federal government to investigate alleged sharp practices and abuses by FinTech and online mobile digital lending and companies in Nigeria

The House of Representatives has decided to investigate the activities of illegal financial technology companies and mobile app loan providers who threaten borrowers for defaulting on loans.

At Thursday's plenary session, the House mandated its Committee on Banking and Currency; Financial crimes; and Telecommunications to “investigate alleged sharp practices and abuses by FinTech and online mobile digital lending and companies in Nigeria and report back within four weeks”.

The resolution was based on the unanimous adoption of a motion of urgent public importance filed by a member of the House, Ahmed Satomi, titled “Urgent need to investigate the sharp practices of unregulated online fintech loan companies and abuse of digital loan mobile apps in Nigeria. '

Satomi criticized the proliferation of online loan applications in Nigeria with "some fraudulent and unscrupulous profits affecting many low-income Nigerians who are forced to borrow and get stuck in a network of fake loan applications hosted on the Google Play Store by individuals and companies to defraud." people with low incomes."

The lawmaker noted that the COVID-19 pandemic has hit many economies, including Nigeria, as jobs have been lost and incomes affected due to lockdowns, movement restrictions and face-to-face interactions. He added that these factors have accelerated the pace of digitization of financial services and the "infiltration of some unscrupulous and unregulated financial services operators".

He said: "The House is concerned that these predatory loan applications are being disguised as platforms where unsuspecting members of the public are promised access to quick, unsecured loans beyond providing a bank verification number."

“The House is also concerned that such victims are expected to repay loans at astronomical interest rates within three to seven days, as opposed to 91 to 365 days for Google Play Store, which has over 83.07 percent market share in Nigeria.

More reasons for the investigation 

Satomi further noted that most of these loan applications or companies and individuals operate without government regulations, with expired licenses and in some cases without licenses.

According to him, investigations into the registration status of credit applications in Nigeria by the Corporate Affairs Commission show that the founding directors of such applications or companies were foreign nationals without the required license to operate the volume of financial transactions and operating illegally in the country.

He said: “The House is concerned about the operations of Kash Kash, with a hosted operating account under the name of Super Car Universal Limited with a certain commercial bank in Nigeria, where Kash Kash is carrying out loan application activities such as exorbitant interest rates they charged customers and defamatory messages sent to their customer contacts when they miss a due date.

“The House is also concerned that such account holder did not have the necessary license to operate as a moneylender, which led the commercial bank to close the first account, but such operations were moved to another account called Speedy Choice, which is still operational. and managed by the same people who managed the previous account.

“The House is again concerned that many of such online loans operating in Nigeria that disburse loans to unsecured and defaulting customers are always sent threatening messages and that the loans and other fintech products can be used for money laundering and other forms of illicit financial flow .

“The House is pained that these unregulated Nigerian fintech companies are shaming and threatening customers for late loan payments.

The lawmaker therefore urged the House to investigate the activities of these fintech companies including OKash, Opay, PayLater, PalmCredit, Branch, QuickCheck, Aella Credit, FairMoney, KiaKia, EasyCredit, NewCredit, Umba, Carbon, FirstNell, SoftNaira, SharpCash, Newcredit, Cash Mall, NairaLand, Naira9ja, New Credit Loan App, Future Cash, SharpCredit, MoneyHub, 9jaCash, Henloan, Get Loan, Plenty Cash, Fundy, iMoneyPlus, CashCredit, LifeLine, Lumos Loan, NairaPlus, Care Finance, Cashbean , LoanMe, LifePurse iLoanPro, LairaPlus , OxLoan and NoNowMoney.”

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