After you download and install an online loan app, say Okash, Fairmoney, 9credit, or Kashkash . What are the things that run through your mind as you unwillingly enter your BVN and other private information?
Do you feel compelled, Choiceless and Optionless?
Or you feel confident that your information is safe and going into a trusted hand?
For many people, the question is, what kind of power do these loan apps have the moment they get hold of your information?
It’s even more disturbing when, with your BVN, they have the authority and power to automatically deduct money from your bank account.
- What then happens after you’re done paying your loan?
- What is your security assurance in the future when you no longer deal with them?
- Do you have to fear for your financial safety or there’s absolute nothing to worry about.
In this article, we’ll briefly talk about some of these concerns as regards to using loan apps to secure loans.
Before we go straight ahead, there’s something we need to quickly take out of the way, and it’s this:
This article is not a legal document. It’s only written by a curious mind who asked a lot of questions and had read voraciously on the topic and has a fair knowledge about computers. If you need professional advice, I’ll advise you consult a pro.
Haven said that,
What are Online Loans?
Online loans are quick loans services which enable borrowers to signup up and get quick loans online.
Fintech companies are popular for offering these kinds of loans. Online loans are regarded as unsecured loans because for the most part, as the borrower, you don’t need collateral.
Some of these online loans include Okash, Fairmoney, 9credit, Kashkash, Gocash, Carbon, Jumia One, and a host of others.
Within the last few years, especially with the outbreak of corona virus, online loans have become insanely popular all over the world.
A lot of people fine the services of these online loan apps quick, hassle free, and convenient.
However we want to think of these loan apps, the fact is, they are closing the margin between financially included and excluded people. And people who have real pressing issues are finding solace and relief from them. Quickly.
However, we need to ask:
How Private is Private with These Online Loan Apps
First and foremost, the moment you install the apps, before you get to do anything else, the first thing you’re required to do is to grant them a list of accesses. These accesses include your SMS, files and contact.
What does it mean?
It means they have full unadulterated access to all your contacts, files, and all messages coming in and going out of your phone.
However, do not be weary. There are lot of apps on your phone who have these privileges. Some you don’t even know.
The question is what can and can they not do with these information?
Many of the loan apps put it that the data gotten from you is required to ascertain your credibility for a loan, and to calculate how much loan you may be qualified for.
Your BVN for instance could be used to verify if you have an outstanding loan with other banks, to see your transaction history, how many bank accounts you have and so on.
In some cases, third parties may have access to your information for the purpose of verification.
For example, here’s how Okash puts it on their privacy page
How about your messages and contacts and files?
As a matter of fact, one of the first things you’d have to give up to these loan apps is your privacy, and then trust them to handle it confidence.
How Secured Is Your BVN?
You probably may not give a rat ass about how companies handle information like your name, email address, date of birth and so on. There are probably a ton of apps on your phone, which you may not be aware of, who twiddle with that information.
But when it comes to your BVN, I’m sure you’d guard it with your birth right.
Bank Verification Number aka BVN is similar to Social Security Number in the US. It’s a number that binds all your financial record.
The threats on BVN with loan apps is not whether or not they’d share your BVN with a third party or whether they’d be careless enough to let a third party have access to it. The threat however is that, with your BVN and bank details, they have the power and authorization to automatically deduct money straight from your account. (It’s there in Okash Terms of Service)
That’s a security concern. Isn’t it?
What happens after you’re done paying your debt? Do they still have the power to deduct money from your account?
Would you wake up one morning and see an uncalled for debit alert out of the blues?
Is there a system that terminate their access to your account after you’re done repaying?
Many people are scared of using loan apps because of this disturbing concerns. It’s a concern about the future. And it’s a valid one.
You don’t want to give someone power to your account, and then live the rest of your financial life on the fear that they may go insane one Monday money and clear your account down to the kobo.
First, let’s say a friend of yours have access to your BVN and your account information. He can’t use that information alone to take money out of your account. If he has your debit card details, he can use it to buy things online, but with only your BVN, nothing can be done.
However, people still commit crimes with BVN. Not to directly use it to take money out of your account, but to access sensitive information about you which they can use to trick you into giving them other sensitive information like your PIN, or card details – which may actually be used to pull money from your account.
Well, for financial institutions, it’s different. With the CBN’s GSI policy, banks can automatically deduct money from your account to repay loans. But only for the sole purpose of loan payment. According to CBN,
That’s where these loan apps get their power to automatically withdraw from your account.
But after you’re done paying, it’s a serious security breach for them to take money from your account without your consent.
I’ve never witnessed a situation where there was a deduction after repayment of loan. But they’ve been complains of deductions after full repayment of loan.
What is very common with loan apps is your status not immediately changing to ‘PAID’ after you’ve fully settled your debt.
This delay in status change is what might lead to unsolicited money being deducted from your account.
It’s a resolvable case.
There’s an old joke that even people who are hired to write terms and conditions for companies don’t read the terms and conditions. No one reads them. But, hey, read them, word for word, if you’re to borrow money.
Secondly, some of these loan apps have complex system of calculating interest. A lot of people have complained over charge in interest rate. Make sure you understand this before your borrow.
And, if you must, it’s very important to download the real app. There are many fake apps who pirate the real ones. Shine your eyes, boy.
Lastly, I’m not here to tell you to use online loans or not. But to objectively discuss what’s at stake. And that you have read.
Most people who use them apps, are mostly in pressing need.
But our people said “Eye wey dey cry dey see road’
Whatever you do, always remember that the first precaution is precaution.
Thanks for reading.