NITDA fines online lending company Soko Loans N 10 million for invasion of privacy

An online lending company, Soko Loans has been fined N 10 million by the National Information Technology Development Agency (NITDA) for various offenses against its users, including injury to life. private sector and “the erosion of trust in the digital economy”.

This followed a series of complaints filed against the loan app for unauthorized disclosure, failure to protect customer personal data and defamation.

According to NITDA spokesperson Hadiza Umar, the company also failed to perform due diligence as required by the Nigerian Data Protection Regulation (NDPR).

She said the agency, as part of its due diligence process, opened investigations after such a complaint was filed in November by Bloomgate Solicitors on behalf of its client.

Umar said investigations revealed that Soko Lending Company made loans to customers without collateral. It does, however, require them to download its mobile apps, which allows the lending company to access their phone contacts.

A loan application

The app also activates a direct debit feature so the business can transfer directly from the lender’s account on the agreed repayment day. But when the lender failed to repay due to an insufficient balance, the company began sending privacy-invasive messages to the contacts.

“According to one of the complainants, when he did not fulfill his repayment obligations due to insufficient credit on his account on the date on which the direct debit was to take effect, the company unilaterally sent messages relating to invasion of the privacy of the complainant’s contacts. “

The NITDA spokesperson said investigations revealed that contacts to whom the messages were sent were unaware of the loan as they were not a party to the transactions and also did not consent to the processing. of their data.

She also accused Soko Loans of integrating trackers that share customer data with third parties into her mobile app. These trackers were installed without user notice or approval and without going through the appropriate legal channels.

In light of its findings, NITDA fined Soko Loans N 10 million for invading the privacy of Nigerians and for eroding trust in the digital economy.

Not the only ones

But Soko Loans is not the only online loan company to engage in this practice. Almost all loan applications and microcredit companies make this one of their main strategies for securing repayment. Indeed, one of their main selling points is the unsecured loan.

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Online lenders

In the absence of collateral, they had to find other ways to get their money back. Accessing contact lists and sending messages that many customers described as “defamatory”, although unconventional, has become a generally accepted strategy for them.

It is not yet clear whether the contract between the lender and the loan applications contains an agreement on this invasion of privacy by the lender. But most of the recipients of the nasty messages certainly didn’t sign up.

However, with their major strategy under attack by NITDA, it remains to be seen whether that would prompt a shift in strategy by lending apps to more conventional and less invasive ways of getting their money back.

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Janet E. Fishburn