Online instant loan apps, emerging national security & economic threat: why DSS, CBN, et al must act now

The advent of Online Instant Loan Apps indeed has changed the complexion of banking and financial services in Nigeria. Although a noveau idea in the country’s banking and financial services sector, yet it has been embraced by many, especially the middle and low income earners. Top of the reason is that these class of people find it useful as it enables them access quick loans to solve urgent needs, with little or no collateral. Consequently, a large number of these class of people, who make up a larger portion of the country’s population have downloaded one or more of such online instant loan apps for obvious reasons. All in a bid to cushion the impact of the biting economic hardship in the country.

However, it is sad to note that whereas the use of these apps is safe and effective in other countries where such online transactions are safer and better regulated, the case appears to be different in Nigeria. It’s unfortunate that cyber criminals have taken advantage of the country’s poor regulation of online banking and financial services to set up online instant loan apps with which when downloaded, they use to defraud unsuspecting Nigerians by spying on the personal and sensitive information in their devices and using same to defraud them.

I am writing from a personal experience because I have become a victim of the security challenges posed by some of these fraudulent online instant apps to the extent that the sum of N20,000 was debited from my account without authorization. I reported to the bank and they are yet to trace the source of the illegal transaction till date. I had another experience with LCredit, an online instant loan app which I downloaded some months ago.

I was accessing soft loans to meet urgent need through the app until the day I was shocked by a notification from Google Play Protect warning me that the LCredit app was spying on my personal data, messages, call log, etc. I became more alarmed with the notification when I discovered that Google had deleted the app from their platform. I browsed the internet to search for the registered office address of the owners of the app but found none.

However, the next day I recieved a call from a staff of the company who couldn’t give me any plausible explanation as to why they where spying on my personal data. I even became more suspicious when I requested for the company’s registered office address to enable me visit and get clarifications on what happened and the staff declined.

As a lawyer, I am aware that the major pre-condition for registering and running a business in Nigeria is a corporate office address. Without a registered corporate office a company can’t exist. Conversely any company operating without a registered corporate address is obviously a fraud. At this point it dawned on me that I may have been dealing with cyber criminals whose aim is to access sensitive data from my device and possibly use same to defraud me.

Further investigations revealed that most of these online instant loan apps are operated by the Chinese using Nigerians as a front. I am aware that China forbids the use of foreign apps such as Facebook, WhatsApp, Instagram, etc in their country in order to prevent cyber espionage. It’s sad that the Central Bank of Nigeria (CBN), the Department of State Services (DSS) and other relevant agencies may have allowed the Chinese run such sensitive business in the country without proper regulation and security check.

I believe it is a high national security risk to allow foreigners to run online banking and financial services apps through which they can access and document the personal data and other sensitive information of citizens vide their devices. It is no longer news that the handset carries very sensitive information which shouldn’t be exposed to a third party. There are many cases of individuals being defrauded through some of these apps. Besides the security risk posed by some of these apps, there is also the economic challenge occasioned by the high interest rates and other fees charged by these apps which most times is about 50%.

Such heavy charges if left unchecked, can further damage the already complicated economy of the country. Therefore, I call upon the CBN, DSS, and other relevant agencies to take necessary steps to regulate the activities of these online instant loan apps most of whom operate with fake licenses, raising suspicion of their criminal intent. This will checkmate socio-economic threats posed by cyber criminals who may capitalize on the platform to wreck havoc on people and the economy of the country. A stitch in time saves nine!

Ekene Bob-Ekechukwu Esq, Public Affairs Analyst.