Nigeria's Mobile Loan Apps Face 11,000 Complaints Over Harassment, Data Abuse

Over 200 mobile loan apps are currently operating in Nigeria, with many of them unregistered. These apps typically offer loans ranging from ₦5,000 to ₦200,000, with repayment cycles as short as seven days. As of Q2 2024, only 211 of these apps have provisional approval or full licenses from the Federal Competition and Consumer Protection Commission (FCCPC). The rest operate in the shadows, accessible only through download buttons.

Between 2021 and 2023, the FCCPC received over 11,000 complaints about harassment, data abuse, and unethical recovery tactics by digital lenders. This number does not include those who did not report due to shame, confusion, or a sense of being exploited. The typical journey of a Nigerian loan app user often begins with a need, such as paying school fees, restocking inventory, or purchasing data for work. Traditional banks require BVNs, collateral, and salary slips, while apps like Palmcredit, FairMoney, Okash, and Carbon offer a quicker solution. However, these shortcuts often come with hidden costs, such as interest rates that can exceed 30% for a 14-day loan, plus late penalties and non-transparent deductions. Some users report receiving ₦20,000 and being expected to repay ₦27,000 in just two weeks.

For instance, Ademola, a customer care officer in Ibadan, took a ₦50,000 loan from a licensed digital lender to cover a medical emergency in March 2024. He repaid it within 30 days and used similar short-term loans three more times to cover car repairs, a niece’s school fees, and an emergency relocation. Each time, he repaid early or on time, and by December, his profile had earned him lower interest rates and longer repayment windows. Ademola did not overuse the apps or borrow to fund lifestyle expenses, using the digital loans as a revolving financial cushion rather than a trap. Conversely, a Lagos-based hairdresser shared anonymously that she borrowed ₦15,000 from an app to buy braiding extensions. She ended up paying over ₦20,000 in 10 days and was harassed by the app, which messaged her contacts. Her story is not unique, as over 70% of mobile loan complaints tracked by consumer rights groups in 2023 involved privacy violations through contact-harvesting and third-party shaming.

The apps access users’ contact lists, SMS, photo galleries, and even GPS location. In exchange for a loan, borrowers give up their digital selves. What the apps can’t secure through legal collateral, they extract through surveillance and shame. This digital asymmetry turns inclusion into exposure and access into exploitation. Consider the case of Chinedu, a 34-year-old civil servant in Lagos who earns ₦300,000 monthly. After rent, utilities, school support for his siblings, food, transportation, and unexpected health bills, his monthly expenses climb to ₦450,000. Every month, the deficit forces him to borrow from loan apps just to stay afloat. The first loan of ₦50,000 helped him pay part of his rent, but by the next month, the app demanded ₦63,000 in return. To avoid defaulting, he borrowed ₦70,000 from a different app. In four months, Chinedu had borrowed from five different lenders, all with short cycles and rising penalties. Now, half his salary goes to repayments, and his contacts receive harassing messages when he delays.

“I feel like I’m working to feed loan apps,” he said. Still, the numbers suggest demand for digital financial services is growing. According to the 2023 EFInA Access to Financial Services survey, 45% of Nigerian adults used digital financial services within the past year, up from 34% in 2020. While the report doesn’t break down digital credit usage specifically, the overall growth indicates rising engagement with mobile-based financial tools. Industry reports and consumer feedback suggest that many users engage with multiple loan apps over short periods, often borrowing from one to settle another. It’s less a financial ladder and more a hamster wheel. Let’s take another example. Eze started 2024 with a stock of imported sneakers and a small online store. Business slowed after the naira fell sharply and import prices surged. In February, he borrowed ₦300,000 from a digital loan app to restock a few pairs. Sales didn’t rebound, and by March, he was juggling repayments, borrowing from a second app to cover the first. By mid-year, Eze had active loans with five different lenders. The constant repayment pressure made him cut prices drastically, further eroding profit. In August, his apps began calling his customers and family, claiming he was a fraud. “They messaged my sister on Facebook,” he said. By December, he had closed the store, sunk in ₦1,100,000 of debt and was unable to access fresh credit. He now uses a burner phone to avoid daily harassment.

Proponents of mobile lending say this is the price of access. The traditional financial system excluded too many for too long, and digital lending, however imperfect, offers a bridge. But a bridge built on punitive interest, opaque terms, and no regulatory safety net is not inclusion. It is an entrapment with a glossy user interface. The FCCPC has taken steps, blacklisting over 100 loan apps and mandating that all apps register with the Commission and display approval numbers. However, enforcement remains weak. For every banned app, two more spring up with new names and cloned interfaces. Many users don’t check licensing status before borrowing. They check if the app sends money fast. Financial inclusion must be about more than access. It must include safety, dignity, transparency, and fair terms. It must ask: who benefits? A user who pays ₦25,000 to borrow ₦20,000 is not being included; they are being priced out of their poverty. Until financial inclusion includes fairness, loan apps will remain what they are to many Nigerians today: fast, flashy traps dressed up as opportunity.