You did everything right. You checked the FCCPC website. Moreover, you saw the app listed among approved lenders. The Google Play Store showed decent reviews. Therefore, you assumed it was safe.
Then the nightmare began.
Here’s what many Nigerians don’t know: Some registered loan apps still use predatory practices. Furthermore, clever scammers create fake listings that look legitimate. Additionally, some apps start ethically but change tactics over time.
The good news? Fraudulent and predatory lenders leave trails. Once you know what to look for, you can spot them before they trap you. This guide will show you exactly how.
Understanding the Three Types of Dangerous Lenders
Before diving into red flags, let’s clarify what you’re protecting yourself against:
Type 1: Completely Fake Loan Apps
These are outright scams. They often:
- Steal your personal information
- Demand upfront payments
- Never actually disburse loans
- Disappear after collecting “processing fees”
Risk level: Extremely high. Avoid at all costs.
Type 2: Unregistered Loan Sharks
These apps operate without any regulatory approval. They:
- Charge illegal interest rates
- Use aggressive harassment tactics
- Ignore all consumer protection laws
- Have no physical addresses or accountability
Risk level: Very high. Report immediately if you’ve already borrowed.
Type 3: Registered but Predatory Lenders
This is the tricky category. These apps:
- May have FCCPC approval
- Appear on legitimate app stores
- Look professional
- But hide exploitative terms and use unethical practices
Risk level: Moderate to high. These are the hardest to spot but can still cause serious harm.
Red Flags Before You Download
Let’s start with warning signs you can spot before even installing an app.
1. Suspicious App Store Presence
Check the developer information:
Red flags:
- Developer name is generic (e.g., “Quick Loans NG” instead of a registered company name)
- No developer website listed
- Recently created developer account (check other apps from same developer)
- Developer based outside Nigeria with no local presence
Green flags:
- Registered Nigerian company name
- Official website linked
- Multiple apps showing professional portfolio
- Physical address mentioned
Pro tip: Google the developer name separately. Legitimate companies have extensive online presence beyond just the app store.
2. Review Pattern Analysis
Don’t just look at the star rating. Dive deeper.
Red flags in reviews:
- Sudden spikes in 5-star reviews
- Generic positive comments (“Great app!” “Fast loan!” with no details)
- Recent negative reviews mentioning harassment (very important indicator)
- Reviews warning about hidden charges or terms changing after disbursement
- Complaints about inability to contact customer service
- Reports of unauthorized debits continuing after repayment
3. Permission Requests That Raise Eyebrows
During installation, apps request permissions. Here’s what’s normal and what’s suspicious:
Reasonable permissions for loan apps:
- Phone (to verify number)
- SMS (for OTP verification)
- Camera (for ID uploads)
- Storage (to save documents)
- Location (for verification purposes)
Suspicious permission combinations:
- Full access to contacts when they only ask for 2-3 references
- Access to photos/gallery beyond ID verification
- Call log history
- Permission to record audio
- Access to other installed apps
- Permission to draw over other apps
Major red flag: Apps that won’t work unless you grant excessive permissions. Legitimate lenders understand privacy concerns. Therefore, they explain why each permission is needed.
4. The “Too Good to Be True” Test
Red flags in marketing:
- “Get ₦500,000 instantly with no documents!”
- “100% approval guaranteed, everyone qualifies!”
- “No credit check required for large loans!”
- “Borrow ₦1 million at 0% interest!”
- “Instant approval in 30 seconds!”
Why these are red flags:
Legitimate lending requires risk assessment. Therefore:
- Real lenders check creditworthiness
- Loan amounts depend on your financial profile
- Some documentation is always necessary for larger amounts
- Interest-free loans beyond small amounts are unsustainable
- Proper verification takes time
Green flags in marketing:
- Clear eligibility criteria stated
- Reasonable loan amounts based on income
- Transparent mention of credit assessment
- Realistic processing times
- Honest about approval rates
5. Online Presence Verification
Before downloading, do this 2-minute research:
Google search: “[App name] Nigeria scam”
- Check what comes up
- Read any complaints on forums
- Look for news articles about the app
Check social media:
- Do they have official Facebook, Instagram, X (Twitter) pages?
- Are pages active with real engagement?
- How do they respond to complaints in comments?
- Do followers seem real or bought?
Search for the company website:
- Does it look professional?
- Is there an “About Us” page with company information?
- Can you find physical address and contact details?
- Is there a privacy policy and terms of service clearly stated?
Red flag: No website or a poorly designed one with minimal information suggests they’re hiding something.
Red Flags During Registration
You’ve downloaded the app. Now watch for these warning signs during sign-up:
1. Upfront Payment Requests
Absolute red flag, run immediately if you see:
- “Pay ₦500 processing fee to apply”
- “Insurance payment required before loan approval”
- “Activation fee to unlock your account”
- “Refundable security deposit needed”
- “Transfer ₦1,000 to verify your bank account”
The truth: Legitimate Nigerian loan apps NEVER charge upfront fees. They make money from interest on loans disbursed. Therefore, any request for payment before loan disbursement is a scam.
Exception: Some apps deduct fees from the loan amount upon disbursement. For example, you apply for ₦10,000, and ₦9,500 is disbursed (₦500 deducted as fee). This is normal, but the fee should be clearly stated in terms before you accept.
2. Vague or Hidden Terms and Conditions
Red flags:
- Terms and conditions link doesn’t work
- Document is extremely short (legitimate T&Cs are detailed)
- No clear breakdown of interest rates
- Repayment terms are confusing or unclear
- Late payment penalties not specified
- No mention of what happens if you default
What to look for specifically:
Interest rate disclosure:
- Should show: “2% monthly interest” or “24% annual percentage rate”
- Should NOT be vague like “competitive rates” without numbers
Repayment schedule:
- Clear due dates
- Payment amount breakdown (principal vs. interest)
- Accepted payment methods
Penalties and fees:
- Late payment fee (exact amount or percentage)
- Early repayment policy
- Any other charges
If you can’t find these details clearly stated, do not proceed. Moreover, screenshot everything you can see before accepting any loan.
3. Excessive Personal Information Requests
Normal requests:
- Full name
- Phone number
- BVN (Bank Verification Number)
- Email address
- Home address
- Employment information
- Bank account for disbursement
- 2-3 references with phone numbers
Suspicious requests:
- Your mother’s maiden name
- Your bank account PIN or password
- OTP (One-Time Password) from your bank
- Access to your email account
- Social media passwords
- More than 5 references
- National ID, driver’s license, AND international passport (one should suffice)
Major red flag: Any request for your ATM PIN, internet banking password, or OTP. These should NEVER be shared with anyone, including loan apps.
4. Pressure Tactics During Sign-Up
Warning signs:
- “This offer expires in 5 minutes, apply now!”
- “Only 3 spots left for loans today!”
- Pop-ups pressuring you to complete registration quickly
- No option to review terms carefully before accepting
- “You must accept all terms to see loan amount” (you should see offer details before accepting)
Why this is a red flag:
Legitimate lenders want informed borrowers. Therefore, they give you time to read terms, calculate repayment capacity, and make wise decisions. Pressure tactics indicate they’re hiding something.
5. Strange Loan Amount Calculations
After assessment, they show your approved amount. Watch for:
Red flags:
- Approved amount seems random (₦17,843 instead of round number)
- No clear explanation of how amount was calculated
- Suspiciously high approval for first-time users with poor credit
- Amount changes between screens without explanation
Question to ask yourself: “Does this amount make sense based on the information I provided about my income?”
If you earn ₦50,000 monthly and they approve ₦300,000 with 7-day repayment, something is wrong. This sets you up for default and harassment.
Red Flags After Loan Disbursement
Sometimes, predatory behavior only becomes clear after you’ve received the loan.
1. Unexpected Deductions and Charges
What’s normal:
- Agreed-upon processing fee deducted from loan amount before disbursement
- Interest calculated as specified in accepted terms
Red flags:
- Random “insurance fees” never mentioned before
- “Platform fees” appearing suddenly
- “Management charges” added without prior disclosure
- Total repayment amount is much higher than calculated based on stated interest rate
Example of the scam:
You borrowed ₦10,000 at stated “10% interest”
- Expected repayment: ₦11,000
- Actual amount they claim you owe: ₦15,000
- They add “unexpected fees” not clearly disclosed
What to do:
- Screenshot the original loan offer showing terms
- Calculate what you should owe based on those terms
- Demand a detailed breakdown showing how they calculated current balance
- Report discrepancies to FCCPC
2. Communication Suddenly Changes
Red flags:
Before disbursement:
- Professional customer service
- Quick responses to inquiries
- Helpful support staff
- Multiple contact channels working
After disbursement:
- Customer service becomes unreachable
- No response to messages
- Automated responses only
- Phone numbers no longer working
- Email bounces back
Why this matters:
Good lenders maintain communication throughout the loan lifecycle. Disappearing after disbursement suggests they plan to use aggressive recovery tactics rather than proper customer service.
3. Repayment Process Problems
Red flags:
- No clear repayment option in the app
- Payment instructions keep changing
- “System error” prevents payment near due date (then they claim you defaulted)
- Multiple account numbers given for repayment without clear explanation
- Payments made don’t reflect on your account balance
- No payment confirmation provided after you transfer money
The predatory pattern:
Some apps intentionally make repayment difficult. Then they claim you defaulted. Subsequently, they add late fees. Finally, they begin harassment, even though you tried to pay.
Protect yourself:
- Always pay through official channels shown in the app
- Keep receipts and screenshots of every payment
- If payment isn’t reflecting, report immediately and keep proof of your report
- Never pay to personal accounts unless officially verified
4. Harassment Begins Before Due Date
Major red flag:
Calls and messages start before your loan is even due. This indicates the app uses harassment as standard practice, not last resort.
Normal collection process:
- Reminder message 2-3 days before due date
- Follow-up on due date if payment not received
- Grace period (usually 1-3 days) before late fees
- Professional communication throughout
Predatory collection:
- Calls starting days after disbursement
- Multiple calls daily before due date
- Threats before any default
- Contact list accessed immediately
- Aggressive language from the start
If this happens, you’re dealing with a loan shark. Document everything and report immediately.
How to Verify Legitimacy: Your Pre-Borrowing Checklist
Before accepting any loan, complete this verification process:
✅ FCCPC Verification
- Visit: fccpc.gov.ng
- Find: List of registered digital lenders
- Confirm: Your app is officially listed
- Note: Registration date and company name
Important: Scammers sometimes create fake listings or use names similar to registered companies. Therefore, verify the exact company name and developer match the official list.
✅ CBN License Check (for microfinance banks)
- Visit: cbn.gov.ng
- Search: Supervised financial institutions
- Verify: If the lender claims CBN licensing
✅ Company Registration Confirmation
- Visit: Corporate Affairs Commission (CAC) website
- Search: Company name
- Verify: Company is registered and active
✅ Physical Address Verification
Test their address:
- Google the address they provide
- Check if location exists on Google Maps
- Look for photos—does it look like a business location?
- Consider visiting if local (for large loans)
Red flag: “Virtual offices” or addresses that don’t exist.
✅ Contact Information Test
Before borrowing, test their customer service:
- Call their listed phone number—does someone answer professionally?
- Send an email with a question—do you get a real response?
- Message on social media—is there engagement?
The 24-hour test: Send inquiries through all channels. A legitimate business responds within 24 hours to at least one channel.
✅ Interest Rate Comparison
Research market rates:
Currently in Nigeria, typical digital lender interest rates range from 5% to 30% monthly. Therefore:
- 5-10% monthly = Reasonable
- 10-20% monthly = High but common
- 20-30% monthly = Very high—consider alternatives
- Above 30% monthly = Predatory/possibly illegal
Calculate total repayment before accepting. Use this formula:
Total Repayment = Loan Amount + (Loan Amount × Monthly Interest Rate × Number of Months)
If the total seems excessive, it probably is.
The “Sleep On It” Rule
Never accept a loan immediately. Instead:
- Research the app thoroughly
- Calculate if you can afford repayment
- Make final decision with clear mind
Desperation leads to poor decisions. If you need emergency money today, consider:
- Borrowing from family/friends
- Salary advance from employer
- Selling items you don’t need
- Community savings groups
These alternatives are better than predatory lenders.
The Power of Saying No
Remember: You are not obligated to accept any loan offer.
Even after:
- Downloading the app
- Completing registration
- Seeing your approved amount
- Reading the terms
You can still say no. Close the app. Uninstall it. Walk away.
No loan is worth your peace of mind, dignity, or financial future.
Use PebbleScore for Recovery Your Credit Health
PebbleScore helps you:
- Check credit damage: See if the predatory app reported negatively to credit bureaus
- Dispute inaccuracies: Challenge unfair negative marks
- Remove BVN blacklisting: We help clear unjust blacklists
- Rebuild credit: Use our tools to repair damage
- Find better options: Connect with ethical, verified lenders
Conclusion: Trust Your Instincts
If something feels wrong, it probably is. Moreover, your gut feeling combined with this knowledge makes you nearly impossible to scam.
Key takeaways:
- Registration doesn’t guarantee safety, verify thoroughly.
- Read every word of terms before accepting.
- Never pay upfront fees for loan applications.
- Research online reputation before borrowing.
- Calculate total repayment before accepting any amount.
- Document everything from the start.
- Walk away from pressure tactics and unrealistic promises.
- Report predatory behavior immediately to FCCPC.
- Use PebbleScore to access better lending options
The loan app industry in Nigeria is evolving. While predatory lenders still exist, informed borrowers like you make their operations harder. Furthermore, every report strengthens regulatory enforcement. Together, we’re creating a safer lending environment.
Stay informed. Stay protected. Borrow wisely.