Not all is well with the concept of instant loans. App-based loans have already claimed six lives who succumbed to the aggressive recovery tactics by lenders, which is why one has to be very careful. Most money lending apps do not have a website and are available only on Play Store, that too without providing any information/licenses about the company. The only available information in most cases is an email address and a phone number.
Loans in such app-based platforms are generally classified into two, Salary Advance Loans& Instant Personal Loans. Considering the instant frauds of loan happening, Google Play Store does not allow apps that offer loans with tenures below 60 days. Many of them were removed from Play Store for violating policy, but are reappearing with different names.
Step 1: Before installing the application, they demand access to photographs, phone book and location services
Step 2: Customer has to submit photo ID, Aadhaar number and upload a selfie/photo from the registered mobile
Step 3: Loan gets approved after the completion of electronic authentication (Third-party authentication for Aadhaar with unregistered NBFC lenders is illegal)
Step 4: Loan ranges from Rs 500 to Rs 50,000, sanctioned instantly and interest amount gets deducted. (For a loan of Rs 2,500, a victim was sanctioned Rs 1,600, and asked to pay Rs 2,500 in just one week)
Step 5: If the customer fails to repay the loan in time, the lenders will resort to aggressive recovery tactics including:
• Call and abuse the customer’s contacts from address book
• They reportedly call at midnight too, sometimes up to 100 calls from different numbers in a day
• They even add the contacts in Adult WhatsApp groups, share victim’s morphed photos and videos to the family members
• Send fake FIR/ law suits
• Threaten saying CIBIL score will be zero (you may never get a loan in a future)
• Female victims are asked to send nude photographs for loan waiver and the pictures will later be used for blackmailing and collection of dues
Even if the repayment delays for one day, they pressurise the victim to repay the amount in five minutes and they offer another loan for repayment of the existing loan. It is reported that a victim had to take over 25 loans from different instant loan apps to clear the dues.
• Credit check not required: They do not check Experian or CIBIL Credit Check Scores, instead focus on personal details
• Lender is not registered with the government: To be in the lending business, lenders are required to register with the RBI as an approved NBFC lender
• Non-existence of physical address: Lender does not provide a physical address or contact information
• Advance payments: Fake Lenders might demand advance payment or fees in the name of GST fees or processing fees
• Loan offer expires in a few hours or days: Scammers come up with limited period offers and ask applicants to make decisions quickly. Reputed bankers offer interest rates and loan amounts only after evaluating CIBIL credit history
What to check for:
• Check for Reserve Bank of India’s (RBI’s) mobile-only Non-Banking Financial Company (NBFC) license
• Check for contact information such as phone number, email and physical address on the website/mobile app
• Look at various professional websites that review various loan apps
• Lender should send you the Loan Sanction Letter, copy of the agreement & EMI amortisation schedule
• Fee collected should be processing fee (not greater than 1% of the loan) + stamp duty, DD charges, and GST on deducted amount
• In case you fall victim to the fraudsters, immediately file a complaint online on www.cybercrime.gov.in or reach the nearest Cybercrime police station. Send a message to your contacts that you are in the midst of an instant loan fraud
(Author is the founder of End Now Foundation, www.endnowfoundation.org)
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