You typically only take a quick loan when you need to take care of personal issues or business. As part of the loan application process, you have to submit your bank information, including your BVN (bank verification number) bank name, account name, account number, and debit card details (name, number, and PIN). You also have to accept the terms and conditions of the loan app, which includes auto debiting your bank account when it’s due date or if you default on your loan.
However, sometimes, even after completing your loan repayment, you find out that a loan app is still auto debiting you endlessly. The reason for this is usually that the quick loan app is yet to update its records about your repayment or just plain being fraudulent, hoping that you won’t find out. Whatever their reason, there’s a way out, and you’ll be able to get them to send you your money back.
Are Loan Apps Even Allowed to Automatically Debit?
An authorized FCCPC (Federal Competition and Consumer Protection Commission)-approved loan app can have unrestricted access to your linked bank account, as long as you accept their terms while signing up. Usually, loan apps debit your account if its due date or you defaulted but previously had insufficient funds. Fairmoney, for example, will auto debit the account, and charge a 1% penalty fee if you have defaulted.
A double or multiple debit by error is also possible, which is why you have to stop any loan app from taking your money without your approval. Error aside, some greedy or disorganized lenders can withdraw your money until you contact their representative and report the issue.
How to Stop Auto Debit from Loan App in Nigeria
Block your card
The go-to solution is to block your ATM card, and get a new one. While your card is blocked, you have to inform the lender about the incorrect charges, and ask for a refund if you have paid off your debt.
If you still owe the loan app, blocking your debit card doesn’t cancel your contract with them as you still owe the loan balance. It is also illegal for you to block your form of repayment, thereby stopping the lender from taking back their money.
Usually, whether you block your card or not, a loan app licensed to operate in Nigeria can still debit you from your other bank accounts. Remember that you submitted your BVN, which provides a facility for loan apps to know just enough about your bank information.
Notify your bank
If you believe that a loan app is withdrawing more money than you owe, notify your bank to revoke the debiting authorization. Of course, your bank will require proof that you have indeed completed your loan repayment. It doesn’t end here; you have to contact the loan app to update their records on their end and refund any incorrectly debited amount of money.
Contact the loan app
Send a text message, an email, or use whatever form of contact is available to notify the loan app about incorrect debiting of your linked bank account. You’ll need proof. For example, if you made a manual transfer to the lender’s account indicated for repayments, you have to provide them with a digital receipt of the transaction. If the loan app automatically charges your bank account multiple times, provide them with the transaction ID to carry out an investigation and refund your balance.
It is your right to receive a refund if a lender incorrectly debited your linked account. The refund must include the complete payment amount and fees deducted from your account.
As for the safety of your ATM card with a loan app, it depends on if the lender is legit. So, be careful what loan app you use to apply for a loan. Legit loan apps do not store your card details. Instead, they process any transactions through a secure PCI DSS (Payment Card Industry Data Security Standard) compliant payment gateway.
What if You Actually Owe a Loan App?
In this case, it is within a lender’s right to automatically debit your linked bank account when it’s due date, and with a penalty fee if you have defaulted due to initial insufficiency of funds in your bank account. Even if you block your card to stop a loan app from auto debiting you, they can still charge your other cards on your account until you clear the debt.
If you read the terms and conditions on the lender’s website or app, you’ll find that they’re right to debit your account. However, a loan app that takes your money before the due date is at fault.
So, if a loan app has incorrectly debited your bank account and keeps doing that, temporarily block your card, notify your bank, and ask the lender to refund your money. Make sure you only borrow from a lender with a good reputation. And most importantly, make sure you only borrow an amount you can afford to pay back without damaging your credit history.
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