Chioma’s hands shook as she stared at her phone. The threatening message from a loan app had just arrived, followed by a disturbing call. They said they would expose her to her contacts, smear her reputation, and destroy her credibility if she didn’t repay the N50,000 she had borrowed within the next 24 hours. They didn’t care that she had already paid N40,000 and was struggling to settle the balance due to rising family costs. Desperate and scared, she felt trapped, but Chioma didn’t know her rights or the legal consequences of dealing with loan sharks.

This is a scenario many Nigerians face when they fall into the hands of illegal loan apps and unregistered lenders. However, borrowers have legal rights that protect them from these predatory practices. This blog post sheds light on the steps to take when dealing with loan sharks, emphasizing the importance of understanding your rights.

1. Report to the FCCPC

The Federal Competition and Consumer Protection Commission (FCCPC) is tasked with protecting consumers from exploitative practices, including illegal lending. When Chioma received threatening messages, she could have immediately reported the loan app to the FCCPC.

How to Report:

• Visit the FCCPC website and file a complaint.
• Provide evidence, including screenshots of threatening messages and details of the loan terms.

The FCCPC has been actively cracking down on illegal lending platforms and abusive loan recovery practices. By reporting, you not only protect yourself but help expose these illegal lenders to regulatory authorities.

2. You Are Entitled to N7 Million in Compensation

Unknown to many borrowers, victims of defamation or harassment from loan sharks are entitled to compensation. According to the FCCPC, you can receive up to N7 million in damages for illegal loan recovery practices that defame your character. If Chioma had known this, she would have pursued legal action instead of succumbing to fear.

How to Claim Compensation:

• Document all instances of harassment, including phone calls, text messages, and defamation posts.
• Engage a legal representative to file a defamation suit against the illegal lender.

By taking legal action, victims not only seek justice but also set an example that discourages other lenders from using abusive tactics.

3. Borrowing Is Not a Criminal Offense

Many borrowers, like Chioma, mistakenly believe that failure to repay a loan can result in criminal charges. However, borrowing money is not a criminal offense in Nigeria. Debt is a civil matter, and no borrower should be intimidated or threatened with jail time. Loan sharks often use fear as a tool to manipulate borrowers into compliance, but it’s crucial to know that harassment over unpaid loans is illegal.

If you find yourself receiving threats of imprisonment or other criminal charges, understand that these are false claims. Instead, report such threats to the appropriate authorities, like the police or FCCPC.

4. Most Loan Apps Are Illegal

Chioma borrowed from a loan app that wasn’t registered with the Central Bank of Nigeria (CBN). The app operated outside the law, charging excessive interest rates and engaging in unethical recovery practices.

How to Spot an Illegal Loan App:

• Check if the loan app is registered with the CBN or affiliated with any financial institutions.
• Look out for reviews from other users. Many borrowers share their negative experiences online, which can help you avoid falling into similar traps.

Illegal loan apps have been a growing problem in Nigeria, with many of them engaging in unethical lending practices such as charging hidden fees, illegal interest rates, and abusive debt recovery. If you realize that the app you’ve borrowed from is illegal, you have no obligation to continue dealing with them.

5. Do Not Pay Back After Defamation

Chioma’s mistake was continuing to make payments even after her reputation was smeared. The app had sent defamatory messages to her contacts, accusing her of being a thief and a debtor. In reality, once a loan shark defames you, you are no longer legally obligated to pay the loan.

Why Shouldn’t You Pay Back After Defamation?

• Loan sharks that engage in illegal practices have violated the contract and your rights.
• Defamation is a serious offense that allows you to file a legal suit and seek compensation.

Once defamed, gather all the evidence you can, including messages and any public posts the loan shark may have made. Report these to the authorities and refuse further payment.

6. Keep Detailed Records

Chioma’s biggest regret was not keeping records of all her loan interactions. When dealing with any lender, especially loan sharks, it’s vital to keep records of all communications, repayment schedules, and amounts paid. These records can serve as valuable evidence if you need to report the lender or seek legal redress.

What to Keep Track Of:

• Loan agreements (even if verbal).
• Repayment receipts and transactions.
• All communications with the lender, including threatening messages or phone calls.

Having this information at hand ensures that you are prepared to present your case if legal action is necessary.

Step-by-Step Solutions When Dealing with Loan Sharks

Report to the FCCPC: The first step is always to report any illegal or unethical practices. The FCCPC is there to protect you from harassment, threats, and defamation.

Know Your Rights: You are entitled to up to N7 million in compensation if your reputation has been defamed. Borrowing is not a crime, and no loan shark has the legal right to imprison you.

Stop Payments After Defamation: If your reputation has been smeared, stop making payments. Defamation is a violation of your rights, and you are no longer obligated to continue repaying the loan.

Identify Legal Loan Apps: Always check the CBN registration status of any loan app before borrowing. Avoid apps that are not compliant with legal regulations.

Keep Detailed Records: Maintain a record of all interactions with the lender. This helps if you need to take legal action or present your case to the authorities.

Conclusion: Protect Yourself from Loan Sharks

Chioma eventually found relief when she reported her case to the FCCPC and took legal action. The FCCPC sanctioned the loan app, and she won her defamation case, receiving N7 million in compensation. While the experience was traumatic, it empowered her to stand up for her rights and protect other small business owners from the same fate.

By understanding the legal consequences of dealing with loan sharks and knowing your rights, you can avoid falling victim to these predatory lenders. Report illegal practices, refuse to pay after defamation, and keep a record of all your transactions. With the right steps, you can protect yourself and ensure that loan sharks don’t have the final say in your financial life.