Instant loan scams rampant

Instant loan scams rampant

Many in Bengaluru are falling prey to rogue apps that give small loans and then demand sky-high rates of interest

Instant loan apps, which lend money in a jiffy with no paperwork, are ripping off thousands of people in Bengaluru every day.

They are mostly of Chinese origin and are run with the help of Indian call centres and thug recovery agents.

“The eight cyber crime police stations across Bengaluru regularly receive calls about loan app frauds making threatening calls and sending recovery agents. But people are hesitant to register a complaint. But they should come forward without any fear,” an officer in the Criminal Investigation Department told Metrolife.

Many apps steal data for blackmail. They access WhatsApp chats, contacts, bank account details and other sensitive data and use them for fraud and extortion.

“The rate of interest is cut-throat,” says a top officer. If the borrower is a woman, the threats range from rape to pictures being uploaded on porn sites, he says.

Data theft 

The frauds gain complete access to private photos and videos, besides bank-related details.

“The private data is sometimes sold to other frauds, who pull off their own crimes,” explains the officer. Hacking is often a part of the operation. 

“The frauds keep track of people who search for loans on Google. They gain access to emails and information exchanged with the banks and approach customers posing as bank officials,” explains the officer.

Bengaluru police suspect operators in Kerala, Hyderabad and Goa are involved in loan app scam.

“They build a network across states and talk in different languages to instil faith in people. They study social media profiles to understand their victims.”

“The targets are the educated and small-time businessmen whose businesses have been hit hard by the pandemic,” adds the officer.

Keep an eye out

Some reputed companies list loan apps among their payment options, and curious customers who click on it are told their dues are cleared by the app.

They typically get three days to pay the app, and beyond the deadline, are charged huge interest every day, and start getting threatening calls.

Kapil Gupta, director of Volon Cyber Security, a company that occasionally assists the police, says Google tries
not to allow malicious apps on its Playstore. 

“It is not possible for Google to pre-empt fraud,” he explains. “But they take complaints seriously.”

Borrowers generally tend to ignore the fine print. Penalties and interests spike and make it difficult for lenders to repay the loans, he says.

Cut-throat interest

The apps calculate interest daily. In one case, a borrower who took Rs 10,000 was asked to pay Rs 1 lakh at the end of three months. That amounts to an astronomical interest rate of 10 per cent a day, and 3,650 times a year. By contrast, the banks charge interest of just 14 per cent a year on personal loans. Scam apps sometimes give loans so quickly that many customers don’t realise what is happening. Within days, they are trapped in a debt cycle, borrowing from one lender to pay another. Police say the rate of interest varies, and the recovery agents try to squeeze borrowers as much as possible. 

Quick small loans

Loans range between Rs 3,000 and Rs 10,000, and a fat processing fee is added to the daily interest. The apps employ developers between 17 and 28 years, say police officers investigating fraud cases. Google Play Store recently banned
many Chinese apps following complaints of fraud.

Cases in Bengaluru

December 25, 2020: A 27-year-old  man commits suicide after he is harassed by representatives of a money lending app.

January 1, 2021: Police arrest three directors of a company engaged in instant loans: Syed Ahmed (33), Syed Irfan (26) and Adithya Senapathi (25).

Precautions 

Check credentials of the loan company before borrowing: Is it RBI approved?

When downloading, do not say ‘yes’ to all default options.  Be wary of apps asking for access to your contacts and photos.

Read all terms and conditions before you take a loan. 

Complain immediately 

The cybercrime police urge loan app victims to register complaints without any delay. Their email ID is cybercrimepsbcp@ksp.gov.in. You can call them on  9480801554 or 080 22094480. 

Banned apps

10MinuteLoan, Ex-Money, Extra Mudra, Monkey Box, Cash Goo, First Cash and StuCred.