Can loan apps block your BVN? In Nigeria’s rapidly evolving financial landscape, the use of loan apps has become a widespread trend.
One thing about these loan apps is that they provide easy access to instant loans without the stress of physical paperwork or visiting a bank.
Furthermore, many Nigerians now prefer these digital platforms for quick financial solutions, especially in emergencies. However, with the rise of these platforms also come several concerns, with many asking questions like: “Can loan apps block your BVN?”
The Bank Verification Number (BVN) is a unique identity number for every bank account holder in Nigeria, introduced by the Central Bank of Nigeria (CBN) to slow the traffic of fraud and enhance security.
However, as more loan apps demand BVNs during registration, borrowers worry that defaulting on loans might lead to serious repercussions such as being “blocked” from using their BVN.
What Is The Purpose Of BVN?
The Bank Verification Number (BVN) is simply an 11-digit number that serves as a biometric identification for individuals holding bank accounts in Nigeria.
Introduced by the CBN in 2014, the BVN links all of a person’s bank accounts in Nigeria under a single identity. Its main objective is to reduce illegal banking transactions and enhance the security of banking operations.
Now, when you provide your BVN to a loan app, it allows the app to verify your identity, detect multiple accounts linked to you, and assess your financial credibility.
However, when you give your BVN out, it doesn’t give loan apps unlimited control over your banking activities. This leads to the common concern: can these apps use your BVN against you?
Can Loan Apps Actually Block Your BVN?
Many people believe that if they default on a loan, the app can maliciously block their BVN, cutting them off from all banking services. However, this is not entirely true.
While loan apps can report your BVN to relevant authorities or credit bureaus, they cannot directly block or blacklist your BVN themselves.
On the other hand, here are some other actions that loan apps can and cannot do:
- They can report you to credit bureaus: Loan apps can report your loan default to credit bureaus like CRC Credit Bureau or First Central. Unfortunately, this may affect your credit score and future ability to borrow, but it doesn’t block your BVN.
- They may send threats: Some nasty loan apps use scare tactics, threatening to block your BVN if you don’t pay. These are simply intimidation strategies and they don’t have the legal capacity to carry the threat out.
- They cannot block your BVN: Only the Central Bank of Nigeria or a court of law can authorize the suspension or restriction of a BVN.
- They can access your financial data: With your BVN, some apps may monitor your banking activity, but they do not have the authority to freeze or block your accounts.
Legal Protection and Borrowers’ Rights
Borrowers in Nigeria are protected by the law, and loan apps are expected to operate under guidelines issued by regulatory bodies like the CBN and the Federal Competition and Consumer Protection Commission (FCCPC).
These regulations are in place to ensure fair lending practices and protect consumers from abuse.
Important legal insights include:
- Only a court order or CBN directive can restrict your BVN. Loan apps are private entities and do not have this level of authority.
- Your BVN and other personal data are protected under the Nigeria Data Protection Regulation (NDPR).
- Reporting to credit bureaus must be followed accurately. If your information is wrongly reported, you have the right to dispute it.
- One thing to know is that harassment is illegal. Loan apps that harass you or defame you through messages to your contacts are violating your privacy rights.
What to Do If You Default on a Loan
Defaulting on a loan can be stressful, but it doesn’t mean your entire financial life has to collapse. There are responsible steps you can take to manage the situation and avoid complications. Here are some actions that you can carry out:
- Contact the lender and discuss flexible repayment plans or extensions.
- Avoid ignoring the debt because it is not going anywhere. Silence can escalate the situation. Also, you must show a willingness to resolve the issue.
- If a loan app tries to defame or intimidate you, report them to FCCPC or CBN.
- After you resolve all defaults, continue building your credit reputation with good financial behavior.
- Avoid unregulated loan apps. You must always verify whether a loan app is licensed by the CBN or affiliated with a legitimate financial institution.
Frequently Asked Questions
Can A Loan App Block My Bank Account Using My BVN?
No, loan apps cannot block your bank account using your BVN. Only your bank, under the directive of the CBN or a court order, can restrict your account operations.
Can Loan Apps Report My BVN To The Authorities?
Yes, loan apps can report your BVN to credit bureaus if you default, which may affect your credit score. However, they must follow due process and cannot take illegal action.
Is My BVN Safe With Loan Apps?
Your BVN should be safe if you’re using a licensed and regulated loan app. However, some illegal apps might misuse your data, which is why it’s important to only use apps approved by CBN or listed by FCCPC.