One Tap to Trouble,How Nigerian Fintech Design Is Quietly Powering Predatory Lending

 

When a ₦290,000 credit alert landed on Micheal Orji’s phone, it looked like business as usual. As a Lagos-based construction engineer, large transfers from clients aren’t unusual. This one, however, came with a problem: no client, partner, or associate had sent the money.

The explanation arrived shortly after in the form of relentless phone calls from a digital lender called Newcredit, demanding repayment and threatening to disgrace him publicly if he didn’t comply. Only then did Orji realise the deposit wasn’t income at all. It was a loan he never knowingly applied for.

Orji had used the app years earlier during a cash crunch, borrowing about ₦80,000. He repaid the loan, deleted the app, and moved on. Or so he thought.

Despite deleting the application, the lender still retained his personal data. Within days of the unsolicited disbursement, calls began going out to his contacts, friends, colleagues, and business partners, branding him a dishonest debtor. The reputational fallout was swift and damaging.

What followed crossed from harassment into outright danger. The lender instructed Orji to “refund” the money by sharing his debit card details, something Nigerian banks consistently warn customers never to do. That was his final confirmation that something was deeply wrong.

Orji’s story isn’t an outlier. It’s part of a pattern.

Loans You Didn’t Ask For

Another example sits plainly on Google Play. Esther Adewunmi, reviewing Palmcredit, describes downloading the app and beginning a loan request. Halfway through, she reconsidered. The interest rate was steep, the repayment window tight. She exited the process, explicitly selecting “interest rate too high” as her reason.

The next day, Palmcredit credited her account anyway.

Palmcredit and Newcredit are among a growing class of online-first lenders accused by users of disbursing loans without explicit, final consent or after borrowers abandon applications midway. Once the money lands, repayment pressure begins, often pulling borrowers into a spiral where new loans are taken to settle old ones.

The Rise of Digital Lending in Nigeria

A decade ago, the idea of instant, collateral-free online loans would have sounded unrealistic in Nigeria. People leaned on family networks, informal savings groups, or, if they were lucky, traditional banks.

Commercial and microfinance banks, under Central Bank of Nigeria (CBN) oversight, demanded extensive documentation and typically preferred corporate borrowers. Individuals and small businesses were often locked out.

Then came smartphones, cheap data, and a wave of fintech innovation.

Digital lenders stepped into the credit gap, offering fast, small loans with minimal friction. Over time, underwriting shifted from payslips and guarantors to smartphone data and behavioural algorithms, often powered by machine learning.

By 2016, Paylater, now Carbon, launched Nigeria’s first major lending app. Branch and FairMoney followed in 2017. The sector exploded.

By September 2025, around 400 digital lenders held full operational approval from the Federal Competition and Consumer Protection Commission (FCCPC), nearly triple the number operating in April 2023.

Their core customers? Individuals and small businesses historically excluded from formal credit, now accessing quick cash at high interest rates.

To manage risk, lenders harvest data aggressively. Some require Bank Verification Numbers (BVN). Others pull bank statements via APIs. Many go further.

Palmcredit’s terms, for instance, allow access to contact lists and explicitly permit notifying those contacts in cases of default. The same terms disclaim responsibility for system errors, inaccuracies, downtime, or even fraudulent use of customer accounts. In effect, if a loan appears without consent, borrowers have little practical recourse.

High interest rates are used to offset default risk. Borrowers pay twice: once with their privacy, and again with their finances.

Dark Patterns: Design That Deceives

Nigeria’s credit shortage didn’t create predatory lending but product design choices have amplified it.

These choices are often explained through “dark patterns a term introduced in 2010 by UX expert Harry Brignull to describe interface designs that manipulate users into actions they might not otherwise take.

According to Oluwadamilola Ajulo, a user experience researcher, these patterns aren’t accidental.

It’s design thinking, Ajulo says. No one ships a product without intent. These decisions are thought through. They’re part of the plan.

 How Dark Patterns Show Up in Loan Apps

In digital lending, dark patterns take several forms:

• Information opacity: Key details fees, interest compounding, repayment consequences are buried or vaguely explained.
• Immortal accounts: Users can delete an app but have no clear way to delete their data or deactivate accounts.
• Data traps: Broad permissions allow lenders to weaponize personal information after consent is unknowingly granted.
• False urgency: Interfaces push speed over comprehension Get cash in 60 seconds while downplaying long-term cost.
• Social proof manipulation: Pop-ups tout unverifiable testimonials or outright fake reviews to manufacture trust.

Ridwan Oloyede, AI Governance and Tech Policy Lead at Tech Hive Advisory, explains that Orji’s case likely involved an active backend account long after the app was deleted.

Oloyede’s research also shows that some apps purchase fake testimonials from “review-as-a-service” marketplaces, artificially inflating ratings. App stores treat this as fraud, sometimes removing offending apps entirely.

Other tactics are subtler:

• Bright, attention-grabbing call-to-action buttons
• Strategic placement of icons on the right side of screens
• Confirm shaming guilt-inducing messages when users try to exit mid-process

Don’t give up! Fill in a little more information and you’ll get the money, Oloyede recalls from one Spark Credit flow.

Ajulo notes that while dark patterns exist across tech, lending apps are uniquely dangerous because of their audience.

Their users are already desperate. They overlook red flags because they need cash now.

It’s not a tech problem, Ajulo adds. It’s a psychological one.

 When Consent Becomes Ambiguous

Some lenders argue that what users perceive as unsolicited loans are actually targeted credit offers, not automatic disbursements.

Pelumi Abimbola, a former product designer at Lendsqr, says many of these pop-ups are tailored advertisements based on user data. Accepting them still requires a formal application and backend approval.

But even Abimbola draws a hard ethical line:

Crediting a user’s account without explicit consent is a serious issue.

For borrowers under financial pressure, missing a detail or tapping the wrong button can be costly.

Orji repeatedly asked Newcredit to reverse the transaction. The company refused. Instead, the calls continued for months to him and to people in his contacts.

Another borrower, Chukwujekwu Ejike, describes receiving a ₦500,000 loan from EasyBuy, a device-financing lender he’d previously used. He suspects he tapped a pop-up by mistake. The company declined to reverse the funds.

They just left me with paying it, he says.

Six months later, interest stood at ₦200,000. Ejike eventually split the debt with a colleague who needed cash.

Palmcredit and NewEdge Finance (which owns Newcredit and EasyBuy) did not respond to requests for comment.

Read More: How Nigerian Banks and Fintechs Refunded ₦10 Billion in Six Months

Digital lending hasn’t grown in a vacuum. Nigeria’s economic reality has primed the market.

By late 2024, inflation had pushed more households into debt. Food inflation hit 40%. Nearly three-quarters of goods and services rose in price. Transport and energy costs surged while incomes stagnated.

According to the Central Bank of Nigeria, consumer credit jumped 11.1% to ₦4.72 trillion, driven largely by personal loans, which now make up over 80% of household borrowing. Retail loans fell sharply, suggesting Nigerians are borrowing to survive not to buy assets.

Inflation has crushed disposable income, says Ikemesit Effiong, partner at SBM Intelligence.
Digital loans are filling the gap between pay cheques and survival.

For many Nigerians, juggling multiple digital loans at once has become normal.

Regulation: Catching Up to Reality

Digital lenders operate under overlapping oversight from the CBN and FCCPC, alongside state-issued moneylender licences. But apps don’t respect geography. Once listed on an app store, they’re accessible nationwide.

The FCCPC currently lists 47 banned lenders and 103 on a watchlist. Palmcredit, EasyBuy, and Newcredit all hold CBN licences. Neither the CBN nor FCCPC responded to requests for comment.

Nigeria has laws covering deceptive practices and data use the FCCPA, Nigeria Data Protection Act, Credit Reporting Act, and GAID but enforcement has been uneven.

A turning point came in July 2025, when the FCCPC introduced the DEON (Digital, Electronic, Online or Non-Traditional) Consumer Lending Regulations.

What DEON Changes

The new rules are explicit:

• No loan without active, opt-in consent
• Full disclosure of terms before disbursement
• Loan agreements must be shared with borrowers
• No automatic top-ups or pre-approved credits
• Strict limits on data collection and use
• Mandatory dispute resolution within 24–48 hours

Harassment tactics contacting friends, public shaming, unsolicited offers are now explicitly prohibited. Violations can attract fines of up to ₦100 million or 1% of annual turnover, with personal liability for executives.

Borrowers can report violations directly to lenderstaskforce@fccpc.gov.ng.

Spotting Dark Patterns Before They Trap You

Dark patterns aren’t always obvious but there are warning signs.

If the only option is ‘Borrow now,’ that’s a red flag, Oloyede says.

Other signs include:

• Overwhelmingly positive or suspicious reviews
• Reviews written in foreign currencies or languages
• Confusing prompts that force agreement
• Lack of clear customer support channels

Ajulo’s advice is blunt:

If onboarding leaves you confused and unsupported, you’re being set up.

Digital lending didn’t create Nigeria’s financial stress but design choices have turned desperation into leverage. With clearer rules now in place, the real test will be enforcement.

Until then, borrowers remain one tap away from a debt they never meant to take.