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Online App Loan Frauds on the Rise Again

Online App

There is a steep rise in legal mobile lending in India. This has become a blessing in disguise for the scammers’ apps rising in India. The extent of the fake apps is so high that the Play Store had to remove over 200+ of them since the last quarter of 2021 due to a policy violation, but they are reappearing again 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-ware tactics, sending offensive messages, and defaming loan applicants even if they are repaying according to the terms and conditions. The harassment is so much that we have seen over 20+ suicide cases in the year 2021 and now in 2022 we have over four suicide cases since they were unable to bear the harassment from the lenders

The majority of NBFCs lacked the technical expertise to develop their digital lending platforms, thus RBI authorised them to work with technology companies to develop digital lending apps, which passively resulted in the development of Scams 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 loan apps:

a) Victims apply for loans by clicking on the SMS, WhatsApp messages, or social media platforms sent to them.
b) They download the DMZ/APK files and install the scam loan apps.
c) These scam apps seek access permissions to contacts, galleries, and GPS locations of the borrower for the loan to be granted.
d) Once granted access, all the personal details are uploaded on to 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 5000 ₹ is the loan and only 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, the harassment starts with (a) subtle warnings, then (b) abuse. (c) Form WhatsApp groups with friends and family members and send defamatory messages as if you are a thief or a cheater. (d) Forgery of police and court summonses are sent via WhatsApp.
h) Once the victim is terrified and likely to pay and doesn’t have money, these scammers then provide loans from alternative scam 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 the 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 that are available on the phone, especially the 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-ware 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 the physical address of the company.
b) Review the website and applications (Apps 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 Apps 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 in any short links provided by the scammer
h) Do not fill in Google form links provided by the scammer.
i) Never scan the QR code, If you are scanning, it means money is being deducted from your account.
j) Official lenders will never ask for an advance fee before the processing of a loan. Instead, they charge a processing fee, which is deducted from the loan amount itself.