Google has recently updated its policy on personal loan apps, which could have significant implications for the industry. According to a report by TechCrunch, the tech giant pushed an update to its Personal Loans policy on Wednesday for apps on Play Store to restrict loan apps from accessing users’ sensitive information like photos, external storage, videos, contacts, precise location, and call logs.
This is coming over four years after Google published a set of new rules to keep its users safe from the predatory loan apps that were beginning to multiply in its store. This new policy is Google’s way of protecting consumers from these potentially predatory lending practices from some lenders that have led to harassing borrowers. The change will come into effect from May 31, 2023.
According to a statement on the company’s blog, it stated,
Apps that provide personal loans, or have the primary purpose of facilitating access to personal loans (i.e., lead generators or facilitators), are prohibited from accessing sensitive data, such as photos and contacts.
With this new policy update, apps that offer personal loans must have the Play Console App Category set to “Finance” and reveal the following information in the app metadata. This also includes apps that offer loans directly to customers, lead generators, and those that put customers in touch with third-party lenders.
- Minimum and highest repayment terms
- Maximum Annual Percentage Rate (APR), which is typically determined in accordance with local law and consists of the interest rate plus fees and other costs for a year.
- An illustration of the overall cost of the loan, taking into account the principal and all applicable charges
- A privacy statement that fully discloses how to access, acquire, use, and share sensitive user data, subject to the limitations set forth in this policy.
The new policy also bans personal loan apps that require a 60-day full repayment policy or less than the date the loan was issued. It is being introduced with additional requirements in markets including India, Indonesia, the Philippines, Nigeria, Kenya, and Pakistan.
What this would mean for the loan apps
In recent years, personal loan apps have become popular, especially as many people’s access to traditional banking choices has decreased. Without the need for protracted application procedures or credit checks, these apps frequently guarantee quick and simple access to funds.
However, it is not a surprise that there are a large number of apps on Google Play, particularly in Africa, that ask potential users to give them access to their devices’ most private data to continue with an application.
These apps often justify that these details are required for a credit check or risk analysis. However, some victims have claimed that lenders later blackmailed them or harassed their friends and family using incriminating or altered photos that were stored in their phone’s contacts book.
But that is not all; many of these applications also impose high fees and interest rates, making it challenging for borrowers to make timely loan repayments.
According to the new policy, Google banned personal loan apps that require full repayment within 60 days and those with an APR of 36% or higher in the United States.
It is unsure if this new policy rule applies to other markets like Nigeria. However, the new policy could also negatively affect legitimate loan app providers. Many of these companies offer loan repayment periods shorter than 60 days but with APRs well below 36%.
Some of these predatory loan apps did not only take advantage of borrowers using high-interest rates; many offered short-term loans (that require repayment in 30-60 days). This made it easier for them to get away with heavy fees.
With this new policy, these companies will now need to find alternative ways to reach customers who rely on these types of loans, particularly those who do not have access to traditional banking options. However, by banning loan apps with short repayment periods and high APRs, Google might be trying to effectively remove many of the most problematic apps from its platform.
Requirements for personal loan apps in Nigeria based on the new policy
Recently, the Federal government of Nigeria, through the Federal Competition and Consumer Protection Commission (FCCPC), approved 173 digital lending platforms to operate in the country.
Of the 173 apps, 119 have full approvals, and 54 have conditional approvals. The registration and approval process of lending platforms by the FCCPC aims to protect Nigerians from many unguided atrocities. Many Nigerians have reported incessant harassment from these loan apps.
However, with this new Google personal loan policy, there are new requirements for loan apps looking to remain on the Play Store.
- Complete the Personal Loan App Declaration for Nigeria, and provide the necessary documentation to support your declaration.
- Digital Money Lenders (DML) must adhere to and complete the LIMITED INTERIM REGULATORY/ REGISTRATION FRAMEWORK AND GUIDELINES FOR DIGITAL LENDING, 2022 (as may be amended from time to time) by the Federal Competition and Consumer Protection Commission (FCCPC) of Nigeria and obtain a verifiable approval letter from the FCCPC.
- Loan Aggregators must provide documentation and/or certification for digital lending services and contact details for every partnered DML.
- Upon Google Play’s request, you must provide additional information or documents relating to your compliance with the applicable regulatory and licensing requirements.