How the Joy of Instant Loans Can Get Ugly

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Loan sharks peaked in the aftermath of the Covid-19 pandemic, which ravaged businesses and put millions out of work around the world. They attack digital ecosystems by promising quick cash to those running from pillar to pillar for a new job or to earn quick cash to meet expenses.

A 55-year-old bank employee in Bangalore committed suicide on July 29. Nanda Kumar left a note where he listed at least 40 mobile apps and detailed the harassment he faced from their representatives, according to the police.

In mid-April, *Ranvijay Srivastava, 28, was found unconscious in his company park in Lucknow with clefts in his wrist. He was lucky to be saved in time. Earlier this year, Telangana witnessed the sixth incident of suicide due to alleged harassment by digital money lending apps.

Loan sharks peaked in the aftermath of the COVID-19 pandemic, which has ravaged businesses and put millions out of work. They attack digital ecosystems by promising quick cash to those running from pillar to pillar for a new job or to earn quick cash to meet expenses.

Google said Thursday, August 25, that it had removed more than 2,000 loaner apps from the Indian Play Store since January this year for violating terms, misrepresenting information and questionable offline behavior.

The Chinese Enigma

Telangana Police raided offices and call centers in Hyderabad, Bengaluru, Pune and Gurugram in December 2021, from where hundreds of staff called customers. One of the 14 arrested was a Chinese national suspected of being behind 11 of these fake fast loan apps.

“The RBI has failed to sanction the illicit trade in fast loan apps, which are coordinated by major cyber criminals based outside India, especially in China, with the backing of their Indian agents,” Triveni Singh said. , SP, Cyber ​​Crime, UP. CNBC-TV18.com.

He also revealed that the union is mainly based in China. While most of these fake loan apps are operated by the Chinese, the Indians mostly work on commission only as loan collectors.

These apps send out hundreds of promotional text messages, emails and social media posts daily, offering instant loans without having to leave home. Indian agents use Telegram and WhatsApp to contact their targets and ask them to download the company’s app for verification.

The program recovers phone data as soon as it is downloaded, including contacts, social media and photos.

Personal Data Arming

When most apps are loaded on your phone, they require access to storage, contacts, camera, and microphone. It is almost impossible to determine which applications use this information and how. But having unrestricted access to data can provide an advantage to loan sharks or fake apps if a borrower defaults.

When deadlines are not met, defaulting debtors find themselves without a safety net due to exorbitant interest rates (in some situations interest rates can reach 60-100%) and constant harassment. In many circumstances, loan collectors will turn to public libel to recover their funds.

Constant phone calls, publishing defaulter information and sending threatening emails and messages are all part of the recovery process, Prof Singh said.

The curious case of re-emerging applications

To protect borrowers from “misleading and abusive terms”, Google has blacklisted hundreds of such apps from its Android store worldwide. Authorities in China, Indonesia and Kenya have followed suit, shutting down many businesses that promised quick cash to the unbanked.

But digital lending is proving to be a tough market to tame with a huge footprint, said Rahul Sasi, who runs cybersecurity firm CloudSEK.

Sasi, one of the experts who made recommendations to the Reserve Bank of India (RBI) regarding digital lending apps, said the RBI panel is aware that apps that are blocked by platforms like Google circumvent the restrictions. by switching to third-party platforms or using text. messaging for advertising.

The RBI has recommended the establishment of a self-regulatory body (SRO) covering participants in the digital lending ecosystem.

It’s time to get to know

“Most of these apps are illegal. According to the law, a loan company must be a bank or a non-bank financial company (NBFC) and must be registered with the RBI to be able to lend or be licensed as a money lender under the laws on state moneylenders. said Rakshit Tandon, cybersecurity expert and cybersecurity consultant with Internet and Mobile Association of India (IAMAI).

These loan sharks are now profiting from social media marketing. They track Google ad searches to exploit the unmet need for credit and target vulnerable borrowers.

“The Indian Cybercrime Coordination Center (I4C) has become aware of this situation and is constantly talking with Google to keep track of them. And to continue targeting these fake apps on their Play Store,” Tandon said.

Most instant cash loan apps intimidate buyers with a downgraded credit score into taking out another loan to pay off the first one.

And so begins the vicious circle of “ever-greening”.

“I took out a quick loan of Rs 3,500 but had to pay Rs 12,000 in interest on it. I lost my father to a heart attack after they kept calling him and threatening him with dire consequences for my mother and me,” *Ankush Natani said.

There must be a tougher crackdown on these loan sharks, Natani said, or we will continue to lose people to harassment and humiliation at the hands of instant loan app companies.

(*Names have been changed to protect the identities of cyber fraud victims)