₦1.3m Loan, ₦6.8m Repayment: FairMoney Faces CBN, FCCPC

A digital lending controversy has put FairMoney under fresh scrutiny after a Nigerian borrower challenged the calculation that turned an original ₦1.3 million loan into a repayment obligation of about ₦6.8 million following a ₦500,000 top-up.

The borrower, Chukwuemeka Peter Madunagu, is demanding clarity over how the revised obligation was calculated, raising questions that could require examination by the Central Bank of Nigeria (CBN) and the Federal Competition and Consumer Protection Commission (FCCPC).

Madunagu said he had already repaid ₦442,868 on the original facility before obtaining the additional ₦500,000.

But in its response to the complaint, FairMoney stated that the original loan attracted a monthly interest rate of 13.18 per cent, while the top-up carried a monthly interest rate of 20.14 per cent.

According to the lender, the restructuring resulted in a total repayment obligation of ₦6,814,076.

Madunagu, however, disputes the calculation, alleging that the restructuring effectively transferred the interest obligation attached to the original facility into the new loan arrangement.

The dispute raises questions over how digital lenders calculate outstanding principal, accrued interest, top-ups, restructuring charges and final repayment obligations.

It also raises the question of whether borrowers are given sufficient information to independently understand the financial consequences of accepting a revised facility.

Where is the APR?

Under the CBN’s consumer-protection framework, credit agreements are expected to provide customers with key information on interest, charges, repayment obligations and the method used to calculate them.

Customers are also entitled to relevant and truthful information about financial products and services, including information necessary to understand their contractual obligations.

Against that background, the disputed ₦6.814 million figure requires more than an explanation that it was generated by an automated lending system.

Among the questions requiring clarification are the outstanding principal on Madunagu’s original facility when the ₦500,000 top-up was approved, the amount of interest that had accrued at that point and whether any previously accrued interest was incorporated into the revised repayment obligation.

There is also the question of what annual percentage rate (APR) was presented to the borrower and whether the lender provided a repayment schedule showing how the final amount was derived.

An independent reconciliation of the loan ledger could establish how every component of the ₦6.814 million obligation was calculated.

Second borrower reports similar concern

The documents reviewed in connection with the complaint also contain another case involving a FairMoney customer whose repayment obligation rose significantly after an earlier liquidation figure.

In the correspondence, the customer was told that an earlier liquidation amount was ₦1.755 million, while the current outstanding balance stood at ₦2.675 million and the amount required for full repayment was ₦6.495 million.

The customer had received approved loans totalling ₦2.7 million.

FairMoney explained that the lower liquidation figure represented a temporary discount which had subsequently expired.

The lender also stated that its automated system determined the applicable interest and repayment terms and that the relevant information had been displayed before the customer accepted the loan.

But the dispute illustrates the difficulty borrowers may face when the final amount demanded differs substantially from an earlier liquidation figure.

The central issue is therefore not simply whether customers accepted the terms presented to them.

It is whether those terms and the consequences of accepting them were sufficiently clear, comprehensible and capable of independent verification.

Regulators urged to examine loan calculations

The cases have prompted calls for the CBN and FCCPC to examine FairMoney’s lending, top-up and restructuring practices, particularly where customers dispute the resulting repayment obligations.

A regulatory review could include examination of the original loan agreements, revised agreements, loan ledgers, repayment schedules, interest calculations, fees, discounts and disclosures presented to customers before and after top-ups.

Such an examination would also determine whether the lender’s calculations and disclosures comply with applicable consumer-protection requirements.

The FCCPC’s Digital, Electronic, Online or Non-Traditional Consumer Lending Regulations 2025 were introduced amid growing concerns about practices in Nigeria’s rapidly expanding digital lending market.

The regulatory framework seeks to address issues including transparency, consumer protection, lending practices and the conduct of digital lenders.

The commission has also maintained that consumers should receive clear information on the terms and financial obligations associated with digital loans.

Automated system cannot end the debate

For borrowers challenging their repayment figures, an explanation that the amount was generated by an automated system may not adequately resolve the dispute.

Digital lending platforms rely heavily on automated calculations, but the resulting figures still represent enforceable financial obligations for customers.

Where a borrower disputes a repayment amount running into millions of naira, the lender should be able to provide a transparent breakdown showing the original principal, payments made, accrued interest, fees, top-up amount, restructuring terms and remaining balance.

That breakdown would allow both the borrower and regulators to establish whether the amount demanded is consistent with the agreed terms.

The controversy also puts the spotlight on FairMoney’s management, including its chief executive officer, Laurin Nabuko Hainy.

As a major digital lending platform, FairMoney has the opportunity to address the dispute by providing a clear explanation of the calculations and the contractual basis for the amounts demanded.

If the figures are correct, a detailed loan ledger and amortisation schedule should demonstrate how the final obligations were reached.

If the calculations are found to be inconsistent with the agreed terms or applicable regulations, affected customers would be entitled to appropriate redress.

CBN, FCCPC face test

The cases present regulators with an opportunity to determine whether the transparency requirements governing digital lending are working effectively in practice.

The CBN could establish whether the interest and repayment calculations comply with its consumer-protection requirements, while the FCCPC could examine whether the lending practices raise broader consumer-protection concerns under its regulatory framework.

Any regulatory review should establish what borrowers were shown before accepting the loans, what changed when top-ups were granted and how the final repayment figures were generated.

The outcome would also provide clarity for thousands of Nigerians who rely on digital lending platforms for emergency financing and short-term credit.

Digital lending has expanded access to credit, but easier access to loans cannot come at the expense of transparency.

For Madunagu, the difference between a ₦1.3 million original facility and a ₦6.814 million repayment obligation is not a technical dispute over an automated calculation.

It is a multimillion-naira financial liability.

That is why the central question now confronting FairMoney and the regulators is straightforward: Can every naira in the disputed ₦6.814 million repayment be explained and reconciled with the terms the borrower accepted?