FG closes illegal online financial institutions and freezes company accounts

On Friday March 11, the federal government raided and shut down the operations of some illegal online banks.

The Federal Competition Consumer Protection Commission (FCCPC), in conjunction with the Independent Corrupt Practices and Other Related Offenses Commission (ICPC), the National Information Technology Development Agency and the Nigerian Police, raided offices of financial institutions operating on Opebi Road, Ikeja, Lagos.

Among the financial institutions concerned were GoCash, Okash, EasyCredit, Kashkash, Speedy Choice, Easy Moni.

The raid, the FCCPC said, was in response to customer complaints about abusive practices by financial institutions.

Speaking at the raid, FCCPC Director General Babatunde Irukera explained that customers had accused financial institutions of violating their privacy in their debt collection campaign.

He said the agency had been investigating the allegations since 2020.

He said: “This information started quite a long time ago. A while back when the country was in lockdown in 2020 due to the pandemic, we started to see an increase in pawnshops.

“Because there was a lockdown due to the pandemic, people needed a small, easy loan, which is understandable. But over time, people started complaining about poor lender practices, so we started tracking them.

“Towards the end of last year, we gathered quite a bit of information. We started working with other key agencies and the FCCPC led the meeting where we all agreed that there would be a joint effort to review these companies.

According to Irukera, the interest rate charged by online financial institutions seems to violate the ethics of how loans are made.

He added: ‘The two main areas of concern were what appears to be the violation of people’s confidentiality in relation to how these lenders collect on their loans.’

“Second, the interest rate seems to be an ethical breach of how loans are made. So those are the two things we sought to look for.

“We have therefore launched an investigation to try to determine the location of these companies. It was a very difficult thing. We have been doing this for several months and some of them have moved from place to place and we have been visiting these places for months.

The FCCPC boss, however, said investigations revealed that the loan companies were neither Nigerian companies nor registered in the country.

“We discovered that most of these companies operate from the same location. We also discovered that many of them are actually operated by the same person. They are not Nigerian companies, they do not have an address in Nigeria and they are not registered in Nigeria with the Corporate Affairs Commission and they have no license to do their business.

As a result, Irukare said the agency wrote to global app companies asking them to suspend online banking operations.

He said: “Basically what they have is an app, and so we started collecting more information about them. We engaged the public and the people who had been victimized. They gave us more information.

“As we got more information, we had enough evidence to convince the court to issue a warrant for us to investigate a search and seizure. And last month a court issued a warrant and in the meantime and now we were planning an undercover operation, what you see here today. The reason is that we wanted to be sure to reach the place where we could get a lot.

He explained, “In addition to what you see here today, the FCCPC also issued several orders today. Two of them are intended for suppliers: the Apple and Google stores where some of these applications are available. We asked them to shut down the apps of these companies so that people are no longer victimized. Second, some of them went to the bank, asking them to freeze the accounts used by these people.

“I must add however that not all money lenders operate illegally and that is why it took us some time to track these people.

“It also doesn’t mean that the people we’re suing today are the only ones, no. We want to start with them. We also understand that it is about five to seven companies operating in the same place.

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