Fake lending apps

There are hundreds of complaints reported from across the country pertaining to scams involving loan apps that have gone up exponentially in 2021 and 2022. People who are in need of money are falling prey to these unauthorised loan apps.

According to experts, there has been a distinct rise in complaints about loan app scams in India. The cyber fraudsters target everyone but the elderly and the young are more vulnerable. The aged are not so Internet-savvy and neither familiar with digital safety norms. As such, they easily fall prey to these types of frauds.

People are lured by promising a higher loan amount without paperwork and customers will get the money instantly but less than the promised sum. As the customer installs the app, it will have access to sensitive information of the customer. It will gain access to phone contacts, gallery and other information. Using this information, the company will adopt harsh recovery tactics.

The loan agents will abuse and harass the customers and will go up to the extent of calling the friends and relatives of the customers from their contact list. In some cases, customers died by suicide after cyber fraudsters allegedly circulated morphed photos for failing to repay loans taken through an instant loan mobile app.

Recently, Delhi Police busted a multi-crore Chinese loan application fraud and extortion racket, and arrested four people, including the mastermind behind the scam. The Chinese nationals, instead of establishing call centres in India, hired Indian nationals for different positions. Some were hired as supervisors who would then go on to hire more people to make calls for loan recovery while some were hired to morph photos of borrowers.

The Reserve Bank of India Working Group on digital lending said in a report that as many as 600 "illegal loan apps" are there in several app stores for Android users in India. A total of around 1,100 unique Indian loan apps that have the keywords such as loan, instant loan, quick loan, etc, are available in the App stores.

The first and foremost thing that a customer should do before applying loans on apps is to verify whether or not the company is approved by the Reserve Bank of India. It ensures that you do not land in problems pertaining to repayment as the companies which do not follow the RBI guidelines are expected to harass the customers once taking loans.

With rising instances of digital fraud, the central bank is taking a relook at the ‘know your customer’ (KYC) norms to identify inadequacies and fill the gaps.

S Mohini Ratna, Editor, VARINDIA