Frauds by Chinese Loan Apps

 

In recent years, India has seen a surge in the number of Chinese loan apps, which promise instant loans with minimal documentation and fast approval. However, many of these apps have turned out to be fraudulent, preying on vulnerable borrowers and using illegal tactics to recover loans. Here's a closer look at the issue of Chinese loan app frauds in India.

 

Background:

The first Chinese loan apps appeared in India around 2019, with many of them being launched on Google Play Store. These apps promised quick loans of up to INR 1 lakh with minimal documentation and no credit history checks. They targeted people who were unable to get loans from traditional banks or NBFCs due to their poor credit scores or lack of collateral. To apply for a loan, borrowers were required to download the app, submit their personal and bank details, and provide access to their phone contacts, photos, and other sensitive data.

 

Fraudulent practices:

Many of these loan apps turned out to be fraudulent, using illegal tactics to recover loans and harassing borrowers. Some of the common fraudulent practices used by these apps include:

 

High-interest rates and hidden fees:

Many of these loan apps charged high-interest rates, which were not disclosed upfront. They also imposed hidden fees, such as processing fees, late payment charges, and penalty charges, which were not mentioned in the loan agreement.

 

Fake identities and fake apps:

Some loan apps used fake identities and fake apps to trick borrowers into applying for loans. They also used fake customer reviews and ratings to boost their credibility and attract more borrowers.

 

Privacy violations:

 Many loan apps violated the privacy of their borrowers by collecting sensitive data without their consent or using it for illegal purposes. Some loan apps even threatened to share the borrower's personal information with their contacts if they failed to repay the loan.

 

Aggressive recovery tactics:

Many loan apps used aggressive recovery tactics to recover loans from borrowers, such as calling them incessantly, threatening them with legal action, and even sending fake legal notices. Some loan apps also harassed the borrower's family members and friends.

 

Legal action taken:

The Indian government has taken several steps to curb the menace of Chinese loan app frauds in the country. In December 2020, the Reserve Bank of India (RBI) issued a warning to all banks and NBFCs to be cautious while dealing with online lending platforms. The RBI also set up a working group to study the issues related to digital lending, including lending through online platforms and mobile apps.

In January 2021, the Cyber Crime Cell of the Delhi Police arrested four people for operating a fake loan app racket. The police also seized several mobile phones, laptops, and other electronic devices used to create and operate these fake loan apps.

 

In February 2021, the Telangana Police busted a Chinese loan app racket and arrested five people, including two Chinese nationals. The police also froze several bank accounts and seized laptops, mobile phones, and other electronic devices used to operate these loan apps.

 

In March 2021, the Indian government banned 43 Chinese mobile apps, including several loan apps, citing national security concerns. The government had earlier banned 59 Chinese apps in June 2020, including popular apps such as TikTok, WeChat, and UC Browser.

 

Conclusion:

The issue of Chinese loan app frauds in India is a serious one that has affected thousands of borrowers. These loan apps use illegal tactics to trap borrowers and recover loans, and often violate their privacy in the process. While the Indian government has taken several steps to curb this menace, it is important for borrowers to be cautious while dealing with online lending platforms and to read the loan agreement carefully before signing up for a loan.