In Nigeria, the rise of online loan apps has made borrowing easier, but it comes at a hidden cost. While these apps promise quick loans without much paperwork, they often collect personal data that can be used for illegal activities such as identity theft. Loan app agents gather sensitive information like your Bank Verification Number (BVN), National Identification Number (NIN), contacts, and even access to your messages. Unfortunately, this data is being exploited in various ways, from opening fraudulent accounts in your name to blackmail and selling your data for advertising.

1. Opening Accounts in Your Name

One major way loan app agents misuse your data is by opening fraudulent accounts in your name. With access to your BVN and NIN, they can create bank accounts linked to your identity. These accounts are then used for illegal transactions, making it appear as though you are involved in the scam. This leaves victims at risk of being accused of crimes they didn’t commit, damaging their financial reputation.

Prevention:

• Limit the sharing of sensitive data: Be careful about providing BVN, NIN, or passport numbers to loan apps. If an app requests more information than is necessary, it could be a red flag.
• Monitor your financial statements regularly: Keep an eye on your bank account for any unusual activity. If you notice any accounts opened in your name, report it to your bank and close them immediately.

2. Impersonation for Fraudulent Purposes

Loan app agents can also use your data to impersonate you online. With the information they collect, they can easily create fake social media profiles or use your identity to carry out scams. This puts your reputation at risk as others may believe you are the one conducting the fraudulent activity.

Prevention:

• Be wary of excessive app permissions: Some loan apps require access to your social media accounts, which can be misused for impersonation. Always check the permissions you grant when downloading apps.
• Regularly update passwords: To protect yourself from impersonation, ensure that you regularly update passwords for your social media accounts and email, using strong, unique passwords.

3. Blackmail Using Your Contact List

One of the most aggressive tactics used by loan app agents is blackmail. When these apps request access to your contact list, they use it to harass and threaten your family and friends, claiming you owe them money. In some cases, they spread false information about you, damaging your relationships and reputation.

Prevention:

• Deny contact access: Whenever possible, avoid giving loan apps access to your contact list. If the app will not function without it, consider finding another loan provider.
• Educate your contacts: Inform your friends and family about the dangers of loan apps and warn them not to engage with suspicious messages or calls.

4. Using Your Data for Marketing

Many loan apps misuse your personal information for unsolicited marketing campaigns. Once they have access to your email address, phone number, and browsing data, they sell this information to third-party advertisers. This leads to a flood of spam messages, promotional calls, and unwanted ads.

Prevention:

• Read privacy policies carefully: Before using any loan app, check its privacy policy to ensure they do not share your data with third-party advertisers.
• Use apps that offer strong data protection: Opt for loan apps that prioritize user privacy and do not allow the sale of personal data.

5. Selling Your Data to Third Parties

Some loan apps are guilty of selling users' data to third parties without consent. This data includes your demographic information, phone number, and even location. Companies purchase this data for advertising and marketing purposes, making your personal information a commodity.

Prevention:

• Choose loan apps with clear data policies: Only use apps that are transparent about how they handle user data and comply with Nigeria’s Data Protection Regulation (NDPR).
• Report misuse to authorities: If you believe your data has been sold without consent, report the app to the National Information Technology Development Agency (NITDA) for further investigation.

Why You Should Stop Borrowing from Loan Apps

While loan apps may seem convenient, the risks they pose far outweigh the benefits. The misuse of personal information can lead to identity theft, reputational damage, and long-term financial consequences. Additionally, many loan apps charge exorbitant interest rates, trapping users in cycles of debt. Instead of relying on loan apps, here are some alternatives:

1. Build an emergency savings fund: Start setting aside money each month for emergencies, reducing the need to borrow.
2. Seek family or community support: Borrow from trusted friends or family members who won’t exploit your personal data.
3. Use credit unions or cooperatives: These institutions often offer lower interest rates and are subject to stricter regulations compared to loan apps.
4. Explore legitimate financial institutions: If you must borrow, opt for licensed banks or microfinance institutions that are regulated and comply with data protection laws.

By reducing your reliance on loan apps and protecting your personal information, you can avoid becoming a victim of identity theft and other forms of fraud.