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OPED Vaishali Bas Sharma
Last month, Indian law enforcement arrested 12 people in the capital region for extortion under the guise of Chinese loan applications.
These lawn rackets work primarily through a phone app that can be easily downloaded on the Google Play store. Lending apps that provide easy loans of thousands of rupees without paperwork hack users’ phones, steal all data and contacts and cause pain as representatives of lending apps adopt brute force collection strategies. start the cycle of
Chinese Microloan App Scam Techniques
The popularity of these microcredit loan apps can be attributed to the lockdown and economic slowdown caused by the pandemic, which has seen massive layoffs and pay cuts.
India’s industrial production fell by 16.7% in 2020, leaving many workers out of work. The poorer members of society felt the worst effects of this.
Microcredit or small loans serve as essential supplemental loans for people who do not have a verifiable credit record or are ineligible to obtain a traditional bank loan. Alienated by banks and other financial institutions, many became easy targets for scammers.
For those who find it difficult to obtain a loan from a bank or a reputable non-bank financing company (NBFC), there is a steady stream of Chinese scammer apps offering small loans on the Play Store. Thousands of unsuspecting Indians have fallen prey to China’s illegal, unauthorized and fraudulent lending apps.
Chinese apps use a gray area of law, according to consulting firm Deloitte India. The modus operandi is usually a combination of processing fees deducted from the loan, fines, and very high interest rates for late payments. “
The people taking out these loans didn’t understand the terms of the loans they were getting and didn’t know how incredibly high the interest rates were.
Raise Cash, Cash Ray, Mobipocket, Infinity Cash, Kredit Mango, CB Loan, Cash Tree, Minute Cash, Cash Light, HDB Loan, SnapItLoan, Go Cash, and OK Cash are just a few of the hundreds of credit apps available for download. department. Google Play Store.
The popular one was downloaded over a million times within months of its launch. These apps usually list domains but do not open web addresses and the reviews are almost all bogus.
These Chinese loan apps charge high interest rates and use illegal and predatory techniques to collect loans from victims. It uses user data, photos, and contacts to blackmail.
Forced collection practices have resulted in the loss of innocent lives. Dozens of victims of such fraudulent loans have committed suicide under the pressure of financial stress and threats.
The Chinese-owned network, which operates in Indian cities, is proceeding by hiring agents that promise incentives. Billions of fraudulent microloan transactions have taken place since the pandemic.
multiple scams
In December 2021, police arrested a Chinese-owned company Licorice Technology in Bengaluru. A police officer from the Ministry of Economic Affairs said that sanctioning loans is easier and less painful, but the problem comes later.
“Overage will be charged as a fee. For example, if Rs 5,000 is authorized, Rs 1,000 will be deducted as a processing fee. Failure to pay will result in repeated calls from call center staff. These companies will make a profit, then close the business and move on, with perfect paperwork and taking care not to run into any legal hurdles,” he said.
On September 12, Chandigarh’s Cyber Crime Investigation Headquarters detained 21 gang members, including Chinese nationals illegally in India, on the pretext of extorting money by offering them instant online loans. arrested for cheating
The alleged “Hugo Loan App” was registered in China and IP details were also provided to Singapore and China. After investigating several such cases, it became clear that the top bosses manipulating these loan applications were from China.
Efforts to curb predatory lending apps
The Indian government has asked Google to check if there are any predatory lending apps on its platform. Google Play Store is one of the most popular places to download mobile apps. Google has removed some illegal apps, but needs to strengthen its regulatory policies.
Many of these Chinese loan apps that operate with shady practices have already been banned, but many smaller, lesser-known apps have taken their place. We use ads, chat messengers, and mobile app stores at scale.
In light of the constant fraud, extortion and intimidation by these Chinese-run microcredit loan apps, the Home Office has called for urgent and stringent action by law enforcement against predatory Chinese-controlled entities. Chinese scammers operate illegally in neighboring countries such as Nepal, Cambodia, and Vietnam.
- Vaishali Basu Sharma is a strategy and economics analyst. She has been a consultant to India’s National Security Council Secretariat for nearly a decade.
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