PalmPay, a mobile banking company, has refused to clear a N39,263 interest from the account of customer Yinka Lawson (not real name) after he acquired a loan by mistake and paid it back immediately.
On August 5th, Lawson was speaking to his mother as he was trying to make a transaction on Palmpay. He was distracted when he tapped an icon on the FlexiCash service that displayed a N105,600 loan option. Because his face-ID was enabled, the moment he looked back at his phone screen, the loan was approved and immediately authenticated without additional verifications.
Lawson tried leaving the app before it was done loading, but he returned to see that PalmPay had already credited his account with the loan amount.
Lawson immediately began to repay the loan in the instalments stipulated and was able to do so completely within 24 hours. However, even after paying back the amount, the PalmPay app still showed that he was owing the full N39,308 estimated interest for the loan’s three-month period.
READ ALSO: Despite Court Order, PalmPay Refuses to Return N100,000 Erroneously Sent to Its Customer’s Account
Disturbed by this development, Lawson called PalmPay customer service. A PalmPay representative told him that he needed to pay the N39,308 regardless of the circumstances under which he got the loan.
The N105,600 loan was detailed to have a daily interest of 0.6%, which would accrue to N39,283 for the 62 days of the loan plan. This means that the N105,600 would accrue only N633 each day, and since Lawson only had the loan running for two calendar days, he should pay only an additional N1,267 as interest after repaying the principal amount. However, PalmPay insisted he pay the inflated interest.
“The amount is too much, it’s outrageous, I can’t pay that. So are you telling me I have to pay for something that I didn’t even use?” Lawson said.
READ MORE: Customer Lost N2.8m Kept in His Account to Fraudsters — ‘Because PalmPay Agents Were Busy’
Lawson showed FIJ how the loan plans appeared on the PalmPay app. They appear as instant loans that have little to no detail or full information about what the customer is subscribing to. These loans are implemented by a simple tap and face ID or PIN.
CBN’s Consumer Protection Framework mandates financial institutions to provide detailed information on the terms and conditions of a credit agreement to consumers before executing the loan agreement. Such information includes minimum pricing, repayment schedule, repayment amount, tenure and opt-out options.
In addition, it is not contractually reasonable for PalmPay to demand full term interest if the borrower repays the loan in less than the amount of time of the loan period. That breaches both the expected daily interest model implied by PalmPay’s APR structure and Nigerian consumer protection guidelines on fairness.
When FIJ called PalmPay on Friday, its representatives asked that Lawson call customer service again. Lawson did this, and was told by the staff that he still needed to pay the N39,308, and that it was a loan which would require its next instalment by October.
Lawson maintained that he already paid the principal amount in full, so he did not need to make any further payment, but the staff insisted that the interest could not be cleared.
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