Nigeria Cracks Down on Abusive Digital Lenders

Digital lending in Nigeria just got a major cleanup, and borrowers who've faced harassment and privacy violations finally have protection.

The Federal Competition and Consumer Protection Commission started removing predatory lenders from official approval lists after they missed a January 5 deadline to follow new regulations. These rules require digital lenders to register properly, protect user data, and stop abusive debt collection practices.

Nigeria's digital lending market exploded in recent years as more people got smartphones and struggled to access traditional bank loans. But growth came with serious problems. Borrowers reported crushing interest rates, threats from collectors, and loan apps that accessed their contacts without permission to shame them publicly when payments were late.

The new DEON Regulations tackle these abuses head-on. Lenders must now disclose their ownership, follow data protection standards, and treat borrowers fairly during debt collection. Companies that violated the rules have been stripped of their conditional approvals and removed from the official registry of approved lenders.

The Ripple Effect

The cleanup protects both consumers and honest businesses. The registry now helps Nigerians identify legitimate lenders before downloading apps or taking loans. FCCPC Executive Vice Chairman Tunji Bello emphasized that compliant companies deserve a level playing field free from competitors who cheat the system.

The commission is working with app stores and payment providers to enforce the rules. Lenders that earned provisional approval have until April 2026 to complete their registration, or they'll face further consequences.

Past enforcement shows the commission means business. Officials previously ordered removal of several loan apps from app stores and sanctioned companies caught using public shaming and threats to collect debts.

The crackdown signals that Nigeria's booming digital economy needs strong guardrails. As Executive Chairman Bello explained, effective regulation depends on consistent application so consumers get the protection they deserve under law.

Nigeria's approach could serve as a model for other countries wrestling with similar problems in their fast-growing fintech sectors, proving that innovation and consumer protection can grow together.