LENDING AND DEBTOR PROTECTION

Introduction to digital lending

“Good day, Mr. Tunji. We are calling from the recovery desk to remind you that your loan of ₦24,000 was due a week ago. We urge you to make payment before the close of business today, or we will be forced to take harsh, public steps to recover our funds.”

For the  everyday Nigerians navigating tough economic tides, this is not an isolated customer service prompt, it is seen as a normal and general thing being said by them. To go a nudge higher the conversation rarely terminates with a firm telephone call, within forty-eight hours of default, contact books are harvested, WhatsApp BCs are dispatched to family members, colleagues, and church members labeling the borrower a “chronic fraudster on the run,” or even worse,

This then poses the question, where does a creditor’s legitimate contractual right to recover a debt end, and where does unlawful harassment and unconstitutional privacy breach begin? While digital lenders have an undisputed commercial entitlement to seek repayment, Nigerian law does not grant creditors a license to weaponize personal data or bypass due process.

THE CONSTITUTIONAL BENCHMARK: LENDING AND DEBTOR PROTECTION TO DIGITAL LENDING

Every commercial contract in Nigeria exists under the canopy of the Constitution of the Federal Republic of Nigeria (CFRN) 1999 (as amended).

The Right to Privacy (Section 37 CFRN):
Section 37 guarantees that:
“The privacy of citizens, their homes, correspondence, telephone conversations and telegraphic communications is hereby guaranteed and protected.”
Calling a debtor directly to remind them of an overdue obligation does not inherently offend Section 37 if done within reasonable business hours without intimidation. However, when lenders intercept, harvest, or broadcast an individual’s private correspondence and address book to third parties, they breach this constitutional guarantee. In Incorporated Trustees of Digital Rights Lawyers Initiative v. NIMC, Nigerian courts recognized that informational privacy,i.e. the autonomy to control who sees and uses your personal details, is fundamental.

The Right to Dignity of Human Person (Section 34 CFRN):
Section 34(1)(a) protects citizens from torture, cruel, inhuman, or degrading treatment. Subjecting an individual to systematic public shaming and manufactured humiliation reduces human dignity to a bargaining chip for debt recovery.

OTHER STATUTORY FRAMEWORK: LENDING AND DEBTOR PROTECTION digital lending

Nigeria Data Protection Act

Digital lenders often attempt to shield predatory tactics behind fine print that“The borrower clicked ‘Allow’ to contact permissions.” Under the Nigeria Data Protection Act (NDPA) 2023, this defense collapses under statutory scrutiny.
Pursuant to the provisions under Sec 24 NDPA, personal data must be collected for specific, explicit, and legitimate purposes and cannot be further processed in a manner incompatible with those purposes.

Accessing a borrower’s gallery or contact book under the guise of reclaiming a debt and then using those details to terrorize their family violates both purpose limitation and data minimization.
Consent obtained under duress, unequal bargaining power, or hidden terms is invalid. Section 26(3) NDPA makes it clear that consent must be freely given, specific, and informed.

A blanket clause granting a lender permission to defame third parties is unlawful ab initio.
One can argue that the customer agreed to the contract, but what about the third party? When a lender contacts a borrower’s mother, employer, or pastor, those third parties never consented to having their phone numbers harvested or processed. This constitutes an outright, actionable data breach against innocent non-parties under Sections 25 and 39 of the Act.

Federal Competition and Consumer Protection Act
The regulatory watershed against predatory debt recovery is anchored by the Federal Competition and Consumer Protection Commission (FCCPC) acting under the Federal Competition and Consumer Protection Act (FCCPA) 2018.Section 124 strictly prohibits businesses from employing undue pressure, harsh tactics, coercion, or unfair intimidation against consumers.

Cyberstalking and Defamation:Lending and Debtor Protection digital lending

It can be stated that when debt collectors cross the boundary into digital threats or public smearing, their conduct transitions from a civil consumer dispute to criminal behavior.

Section 24 of the Cybercrimes (Prohibition, Prevention, etc.) Act 2015, criminalizes cyberstalking and the transmission of messages via computer systems or mobile devices sent with the intent to bully, threaten, severely harass, or place a person in reasonable fear of violence. Hence threatening to destroy a borrower’s reputation or sending forged criminal mugshots directly triggers cybercrime liability.
Also, circulating messages falsely claiming an individual has absconded with company millions, or tagging them as a notorious criminal, constitutes civil libel and criminal defamation when communicated to third parties. This is frowned against under sec 373 to 381 of the Criminal Code

DRAWING THE LINE digital lending

To maintain clarity, the boundary between permissible creditor diligence and unlawful harassment largely depends on how the process is done. In order for businesses not to infringe on customers right to privacy under the umbrella of reclaiming debt, it is advised that they:

1. Make use of direct calls or SMS reminders sent directly to the borrower during reasonable business hours and not calling repeatedly at late hours, using profanity, curses or abusive language
2. They should also culture the act of sending formal statutory demand letters detailing principal, accrued interest, and contractual default remedies and desist from threatening unlawful arrest or physical violence
3. Business should be contacting formally documented and legally confirmed guarantors who executed a guarantee instrument and stop the habit of harvesting contacts to broadcast shaming messages to colleagues, friends, or employers.
4. Upon constant default, businesses should make institutions of civil debt-recovery suits or small-claims court proceedings for contract enforcement.

CONCLUSION

Debt recovery is a legitimate economic exercise, as no economy thrives where contractual debts cannot be reclaimed. However, a civil debt is not a waiver of fundamental human rights.
When a lender moves from asking “When will you pay?” to threaten “We will ruin your life and defame you to your entire contact list,” debt recovery ceases to be lawful commerce, it becomes an unconstitutional trespass and a statutory crime.
Victims of such harassment are entitled under Nigerian law to lodge complaints with the FCCPC and the Nigeria Data Protection Commission (NDPC), file petitions under the Cybercrimes Act, and seek compensatory and exemplary damages for breach of fundamental rights and defamation at the High Court.

Innovation in credit access must conform to the rule of law,  creditors must recover what they are owed through lawful due process, not through digital extortion.

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CONTRIBUTORS

Ojienoh Segun Justice, ESQ

LEAD PARTNER, EKO SOLICITORS AND ADVOCATES

OLOKUN OREOLUWA JOSEPH

INTERN, EKO SOLICITORS AND ADVOCATES