Muwema: Why it is wrong for banks to publish pictures of loan defaulters

The practice of advertising identity photographs of loan defaulters in the press by some banks is an affront to the law and public policy of Uganda.

It is a repressive act which does not redeem the reputation of the banking industry and only serves to abuse the personal identity data of the bank customer and humiliate him or her.

No doubt the bank customer has a duty to repay the loan as contracted with the Bank and indeed the law provides for appropriate legal measures to be taken by the Bank in the event of default.

The law however does not authorise the arbitrary and high handed practice of stigmatising a customer through publication of his photograph in the press as if he or she is completely lost on any dignity and honour.

It is only in Uganda that this isolated but derogatory act is practiced in this part of the world. Kenya, Tanzania and Rwanda which are co-signatories with Uganda to the East African Legal Framework on Cyber Laws and protection of personal data of 2010, have not climbed down to a level necessary to paste faces of loan  defaulters in their national press.

Kenya, Tanzania and Rwanda have lower loan default rates than Uganda and yet they do not publish photographs of their loan defaulters in the press. This may remove any justification for the practice in Uganda.

The right to protection from unauthorised disclosure of personal identity data which includes the right to privacy of personal photographs is guaranteed by Article 27 of the Ugandan Constitution.

Even though Parliament has not yet passed a specific law on Data Protection and Privacy and a specific law on Consumer Protection, there is enough legal basis to protect confidential information like identity photographs of Bank customers from unauthorised disclosure.

The Bank of Uganda Consumer Protection Guidelines 2011 compels Banks to act fairly and reasonably in their dealings with Customers and in particular, Banks are prohibited from engaging in aggressive, intimidating and humiliating practices.

Under these guidelines, banks can only disclose confidential consumer information if they are compelled by law, in the public interest or with the express consent of the consumer.

There is no law in Uganda which authorises a bank to advertise the identity photograph of a defaulting customer as a means of recovering a debt.

The existing mortgage laws authorise banks to advertise pictures of securities held when conducting a sale of the security in the event of default together with the names of the borrower.

The banks can also seek redress from court in case of default and then pursue the defaulter after obtaining judgment against him or her. It is at this stage that the bank may possibly seek leave from court to advertise the borrower’s personal photograph in the press as part of the execution process.

Banks which advertise personal photographs of their customers commit an offence under the Computer Misuse Act 2011 for publishing confidential electronic data, record or information for a purpose other than that for which they obtained the information.

The purpose for which a customer avails his identity photograph to a Bank is to complete the identification process to the Bank and not to the public.

No bank customer intends that his photograph should be divulged to the public at any stage of the handling of his loan by the Bank let alone through a public advertisement since this information is subject to confidentiality.

As a fiduciary, the Bank is liable for breach of trust and confidentiality when it publishes its customers’ identity photograph without his or her consent or without the authority of the law.

Bank customers usually consent to the bank taking lawful recovery measures for recovery of the loan by enforcing the mortgage or seeking court redress but this does not include publication of personal photographs in the press at any rate.

This matter has received worldwide judicial consideration by many Courts. Justice V. Chitambaresh of the Indian Kerala High Court in the case of Ujjal Kumar vs State Bank of India 2013 had this to say when faced with a case of publication of a defaulter’s photograph by a bank, he held that “the practice of exhibiting a photograph of a person and shamming him in public for the sin of being in an impecunious condition cannot be encouraged in civilized societies….There is nothing immoral in their failure to repay the loans owing to a floundering business or other unavoidable reasons…. Some of the borrowers might even be driven to commit suicide fearing ignominy on account of their photographs being published in the newspapers. It will remain a permanent taboo to their family.”

Uganda is a heavily indebted country to many multi-lateral international lenders and it defaults on occasion. However I cannot imagine these lenders publishing the picture of our President as the embodiment of the authority of the borrower every time Uganda defaults.

This would enlist outrage from government and the community of nations who would rebuke this conduct as uncivilised.

In the same token, government should ensure that private lenders in Uganda do not use excessive and disparaging means to recover their debts from citizens.

Loan defaulters cannot be encouraged to do their business and meet their loan obligations when they are exposed to public shame.

Rather than reform and pay up, some of these defaulters may be hardened by the shame and deliberately refuse to pay.

The other problem is that some people may be discouraged from using banking services for fear of being embarrassed in the same way.

In the end, the practice of advertising identity photographs of loan defaulters may not be the best practice. Banks should collect their debts from customers in accordance with the law.

Fred Muwema is the Managing Partner, Muwema & Co. Advocates.