What is a loan shark?
A loan shark is an individual or organisation that lends money at exorbitant interest rates and frequently threatens violence to recover debts. Loan sharks frequently belong to organized crime organizations, and the interest rates are frequently far higher than the established legal rate.
Are loan sharks legal?
The Federal Competition and Consumer Protection Commission (FCCPC) prohibits all financial technology companies from offering payment or transaction services to online money lenders, also known as loan sharks.
Online banks that lend money include GoCash, Okash, EasyCredit, Kashkash, Speedy Choice, and Easy Moni, to name a few.
On March 11, 2022, the Federal Government of Nigeria closed down some illegal online money lenders following a raid by its joint committee looking into rights violations and unfair practices.
The government disclosed that most of these online money lenders did not register their platform with the Corporate Affairs Commission (CAC) and also engaged in activities that were against the rights of Nigerian consumers.
Also, the interest rates charged by these online institutions violated the ethics of how lending is done. They offer short-term loans to help subscribers meet urgent needs, but resort to unprofessional measures of harassment, cyberbullying, and breach of data privacy of their customers who may have defaulted on loan repayment.
These loan sharks engage in naming and shaming, which is a violation of people’s privacy with regard to how these lenders recover loans, among other violations. They also charged interest rates that go against the morals of how lending is done.
Some of these under-investigation online lenders come up with strategies to go over account freezing and app suspension by utilizing technology and other financial service alternatives.
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How to handle loan sharks
Here are some ways you can handle loan sharks:
Do not reply to unsolicited messages via SMS, chats, calls
People need quick cash, which loan sharks are able to provide. However, anyone who does not consider the long-term effects always supports the survival of loan sharks. Please refrain from accepting any offers you receive via SMS, chat, or phone calls because doing so is against the law and aids loan sharks in establishing their dominance in the contemporary era.
Learn How to Deal With Their Threats
Loan sharks can threaten you or your family with violence. Cases across Singapore have shown how borrowers’ business stalls were destroyed or scandalously called them out in their workplaces. Today, they use the internet to harass and slander borrowers unable to pay their loans due to their extremely high-interest rates.
Stop Paying
Paying your dishonest lender demonstrates to them that you are still under their control. When you realize your lender is a loan shark, you should stop making any payments to them. Please alert the authorities immediately, and hold your ground until assistance arrives. Never ever give them any money.
How to spot a loan shark
Loan sharks are illegitimate lenders that frequently prey on borrowers who can’t receive the money they need from legitimate sources. Especially if you believe you have no other options, borrowing from them is never a wise decision, even if they initially seem friendly.
Some of the warning indications that you might be borrowing from a loan shark include the following:
No Paperwork needed
No paperwork is necessary since paperwork lends anything an air of legitimacy, which loan sharks avoid at all costs. Loan sharks typically prefer to deal in cash rather than bank transfers or credit cards. However, more people are now also using bank transfers.
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Refusal to provide necessary information on the loan
Refusing to provide you with information about the loan – The majority of loan sharks won’t provide you with precise information about your loan, such as the interest rate, specifics of previous repayments, and the total amount you owe.
Taking possessions as security
Some loan sharks would take personal belongings as security, including a passport or bank cards.
Ridiculous interest rates
Even if you’re making regular payments, loan sharks may still raise the balance or tack on more fees at any time. You must get assistance because the debt might easily get out of hand.
Violence threats
Loan sharks frequently intimidate and threaten victims to get them into repaying their loans. If their victims don’t pay, some even start acting violently toward them.
Owners of the company
I learned that these companies’ supervisors are Chinese via my conversations with a couple of their recovery agents. In reality, one of the agents informed me that these businesses are Chinese-owned and that their operations differ from those of the professionally managed loan organisations.
The agent who told me that these Chinese have government allies was the most shocking interaction I had. The agent told me about a business that had recently been shut down by the FCCPC but was now open again.
No known address
The ED of FCCPC, Babatunde Irukere, once stated in a report that locating these businesses is difficult because they operate covertly and without any established addresses.
Guerilla Advertising and Unsolicited Outreach
When you get an unsolicited SMS or call that appears professional but offers a large loan amount with an absurdly low off-market interest rate, it’s clear that the caller is a loan shark. The loan shark wants to catch you off guard by suggesting that you could borrow such a large sum for less. Guerrilla marketing and unsolicited outreach are illegal money-lending practices, so this is a clear warning sign.
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