COVID-19: Chinese loan app trap drives Keralites to despair

Thiruvananthapuram: Keralites have been particularly hard hit during the peak COVID-19 lockdown as hundreds of thousands have had to return home from abroad, due to job loss or layoffs. quarantine.

The severe financial crisis has led to a new social problem for the state: Hundreds of cash-strapped Keralites who opted for instant loans through Chinese lending apps now face threats and media shaming social, leading at least one person to suicide.

trapping app

India’s central bank, the Reserve Bank of India, allows banks and non-bank financial companies to offer loans through digital apps, but most fraudsters operate alongside it, without permission.

Those who opt for loans through Chinese apps – so called because the apps are believed to be designed by fraudsters in China – only receive a fraction of the money promised to them, processing fees are invoiced at the time of disbursement and reimbursement falls after only seven days.

Those who don’t pay will have their photos shared in their family and professional social media groups, a tactic that has driven many to despair.

Compromise of personal information

Almost all of these apps require the loan seeker to provide all personal information, including their social and work phone contacts, social media access, and even permission to track their location.

Nandakishore Harikumar, CEO of Technisanct, a company that operates in the field of cybersecurity and works with the police departments of different Indian states, says: “These companies ask for a wide range of authorizations from the lenders before sanctioning the loan.

“And the police are struggling to press charges both because the operators behind these apps are hard to track down and the complainants actually allowed the app company to share information with their social media contacts.”

Threats and shame

As soon as a lender delays repayment of the loan, the threats come from the enforcement company. Failure to comply has serious consequences. Defaulters are shamed by posting details of the default in all their family and professional social media groups.

A young man from Malappuram district who took an app-based loan and whose repayment was delayed faced the ignominy of having his marriage card scanned and sent to his potential in-laws showing it as a failing.

A social issue

Sebastian Varghese, a financial adviser who is currently helping dozens of people who have encountered problems with Chinese apps, told Gulf News that companies can be very vicious in dealing with customers who delay refunds.

“A teacher in Thiruvananthapuram district got pornographic visuals sent to his contacts, by the app company. shares with all his contacts,” says Varghese.

Varghese got involved in helping victims of loan applications when some of his own friends got entangled. “At first, I only knew a few, but that was just the tip of the iceberg. Today, more than 600 people contacted me,” says Varghese who provides financial and legal services to those who have found themselves in the traps of lending applications.

Focus on South India

One of the characteristics of the loan scam is that the app companies target people in the southern states of India.

The cases have mainly been reported in Kerala, Karnataka, Telangana, Andhra Pradesh and Tamil Nadu. In Telangana, a government official and software engineer committed suicide following harassment from lending app companies.

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