Online app loan frauds on the rise again

There is a steep rise in legal mobile lending in India. This however, has become a blessing in disguise for apps from scammers. The extent of fake loan apps is so high that Google’s Play Store had to remove over 200 of them since the last quarter of 2021 due to policy violations. But they […]

There is a steep rise in legal mobile lending in India. This however, has become a blessing in disguise for apps from scammers. The extent of fake loan apps is so high that Google’s Play Store had to remove over 200 of them since the last quarter of 2021 due to policy violations. But they are reappearing with similar names and icons on social media and messaging platforms.

These scam apps require mandatory access/permissions to contacts, gallery and location, and their sole purpose is to use scare tactics, offensive messages and defaming loan applicants even if they are repaying according to the terms and conditions. The harassment is so much that we saw over 20 suicide cases in 2021 and in 2022, we have four already.

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The majority of non-banking financial companies (NBFC) lacked technical expertise to develop digital lending platforms, after which the RBI authorised them to work with technology companies to develop digital lending apps, which passively resulted in the development of fake apps. End Now Foundation has put up its voice addressing the issue through advisory consultative discussions with RBI and Public Interest Litigation to regulate the mushrooming of loan apps.

Modus operandi of online apps:

a) Victims apply for loans by clicking on SMS, WhatsApp messages or on social media

b) They download the DMZ/APK files and install fake loan apps

c) These apps seek access to contacts, galleries and GPS locations for loan to be granted

d) Once granted access, all personal details are uploaded on their servers

e) Victims upload all proof of documents and access to their smartphones, and the loan repayment duration is usually between 7-15 days.

f) As an example, let’s say Rs.5000 is the loan and only Rs.3200 is released and the rest is deducted as processing, GST, and other fees.

g) If the loan is not paid at the stipulated time, harassment starts with (a) subtle warnings and then (b) abuse (c) WhatsApp groups with friends and family members and defamatory messages as if you are a thief or a cheater (d) Forgery of police and court summons are sent via WhatsApp.

h) Once the victim is terrified and likely to pay and doesn’t have money, they then provide loans from alternative apps, and the vicious circle continues as the victim is forced to withdraw the money to pay for the older loans

Few Red Flags on Online Loan Frauds:

a) Lenders are not officially registered with RBI as approved lenders

b) These lenders offer loans with just a couple of clicks and do not bother to do a credit check

c) They will put more focus on requesting access to all personal details on the phone, especially contact details

d) No physical address or contact information is available on the app or the website

e) A few lenders might also demand advance payment on the pretext of processing fees or GST fees

f) Lenders come up with time-bound offers and ask applicants to make decisions almost instantaneously using scare tactics, mentioning that the loan offer expires soon

g) Interest rates are not clear and vary person to person.

h) Offering a guaranteed loan irrespective of your CIBIL rating

Safeguarding yourself from online loan frauds:

a) Verify physical address of the company

b) Review website and applications (App Store/Play Store) before applying for a loan

c) Never download DMZ or APK files from websites, social media or messaging platforms. Download only from App Store or Play Store

d) Look for a Secure Payment (https://—URL with a Pad Lock Symbol).

e) Never share OTP/PIN numbers in any form with the buyer or seller.

f) Never do the payment transaction while you are on the call.

g) Do not click and fill short links provided by the scammer

h) Do not fill in Google form links provided by the scammer.

i) Never scan QR codes; If you are scanning, it means money is being deducted from your account

j) Official lenders never ask for an advance fee before processing a loan. Instead, they charge a processing fee, which is deducted from the loan amount itself.

Stay tuned to Cyber Talk for more on internet ethics and digital wellness brought to you by Anil Rachamalla of the End Now Foundation, www.endnowfoundation.org

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