There have been a proliferation of fake loan apps in India and many other countries especially after after the global economic recession that greeted the post Covid 19 pandemic era. Many individuals and families have been unable to keep pace with their financial obligations and daily family needs and upkeep.
This pandemic residual effects have had a great toll on the personal finances of many Indians as so much that people either lost their jobs or became under-employed. This has thrown family budgets and daily expenses to confusion and with the resultant needs of looking up to the now new emergent quick digital loan apps for remedy.
Unfortunately this has come with its burden of impovering many Indians either through perpetuation of loan app scams or outright defauding by the fake loan apps in India by many of the Chinese lending applications. Indians in their thousands have, of late, been getting sucked into the trap of instant loans being offered by unregulated digital lending apps, mostly linked to entities based in China. What follows is stealing of personal data and a relentless cycle of extortion that has resulted in some of these borrowers taking the extreme step and ending their lives.
According to a recent report from Tribune India, Indian Police recently busted a fake loan application and extortion gang by arresting 22 persons. They allegedly lured people with fake loan app schemes, and the money that was extorted using their personal data would be sent to their associates in China via cryptocurrency.
The report quoted KPS Malhotra, DCP (Cyber Crime Unit) of Delhi Police as saying, “We have found that there were 100 such apps involved in fake loan and extortion rackets. The apps would lure users to get instant loans. They would seek permission from users to access their data and steal all their contact details, chats, photos, etc. These would then be uploaded on servers based in Hong Kong.” The police investigation found that the gang members, referred to as recovery agents, would then call the users and extort money using their morphed photos by operating from call centres.
“Due to fear of society, the user would pay the money but the accused would extort even more. All money was being sent to China through hawala channels or cryptocurrency. Victims who would take loans of Rs 10,000 to Rs 15,000 were threatened and forced to pay up to lakhs. We also received reports of suicide cases because of the fake loan app,” DCP Malhotra added.
According to the agency, most instant loan apps have links to entities based in China. Chinese nationals or companies directly own several financial technology (fintech) firms in Gurugram, Delhi, Mumbai and Bengaluru or control them by using proxies as directors, it said, adding that to initiate the lending business, they infused funds into these firms directly or indirectly from overseas locations such as Hong Kong.
Fake loan Apps In India: How They Operate And Get Their Targets
How do fake loan apps in India operate? Below are some tips that can guide customers and potential borrowers to stay safe from these scam lending applications.
Fraudsters mostly target people from low or medium income groups, who are generally considered to be not-so savvy in finance and technology. They are offered small amounts (Rs 10,000- Rs 20,000) as loan.
Fraudsters first deduct a certain percentage of money lent as processing fee and combine this with penalties on any delay in repayments.
They also charge exorbitantly higher interest rates than the legal range prescribed by the RBI.
These lending apps get access to personal data from the borrower’s mobile phone, which they allegedly use to harass them and extort money.
How To Keep Safe from Fake Loan Apps In India: Tips and Precautions for borrowers
- Please follow the following precautions not to fall victim of the various fake loan apps in India
- Do not click on unknown, unverified links and immediately delete such an SMS/email.
- Unsubscribe to mails providing links to a bank, e-commerce and/or search engine website. Block the sender’s ID before deleting the email.
- Always go to official website of your bank service provider.
- Check URLs, domain names received in emails for spelling errors.
- In case of suspicion, inform the financial institution.
- There is no need to enter PIN or password anywhere to receive money.
- Check on the publishers or owners of the app before downloading it.
- When downloading an app, only give permissions that are absolutely essential for using the application.’
FM asks RBI to make ‘white list’ of Legitimate Loan Apps To Differentiate Fake Loan Apps In India
The government has asked the Reserve Bank of India to prepare a “white list” of legal digital lending apps to be permitted to be hosted on app stores. The RBI will also monitor money laundering through mule/rented accounts, take proactive action in cancelling dormant non-banking financial company (NBFC) licences and remove unregistered payment aggregators within a timeframe.
List of Top 25 Fake Loan Apps In India for 2021/2022
- Raise cash
- PP money
- Rupees master
- Cash ray
- Papa money
- Infinity cash
- Kredit mango
- Kredit marvel
- CB loan
- Cash advance
- HDB loan
- Cash tree
- RAw loan
- Under process
- Minute cash
- Cash light
- Cash fish
- HD credit
- Rupees master
- Ruppes land
- Rupee loan
- Cash room
- Well Kredit
According to Times of India report, people who’d taken small loans ranging from Rs 5,000 to 10,000 were being forced to repay in lakhs. An analysis of application code, call details and financial examination revealed the network was spread across Delhi, Karnataka, Maharashtra, UP and other parts of the country.
Who were the kingpins of the Fake Loan Apps?
The report further claims the racket was mainly operated by Zixia Zhang and Luo Rong. Besides, cops have also zeroed upon two other suspects whose claimed identity is Zoya and Kobe Bryant. Cops have their passport details, etc, and are trying to locate them.
According to DCP KPS Malhotra, the forensic and internet protocol detail record analysis has revealed that millions of terabytes of user data were being transmitted to servers based in China and Hong Kong. The IP addresses and money routes have also been found to be located in China. “The apps were being hosted from AWS and Ali Baba servers, which are hosted in India but do not comply with norms being American companies,” DCP Malhotra added.
According to the police’s investigation, the members of this syndicate worked in three modules. The first was the financial team, the other was the technical group while the third was the recovery module. The technical team developed the loan app.
Fake Loan Apps In India: Their Modus Operandi
The whole racket worked in a corporate-like set-up—the network was headed by a director, followed by a group of managers. Three team leaders were heading teams of telecallers who used to extort money from people. Telecallers were hired by the human resources division and a few used to manage the finances of the racket. A module worked on providing WhatsApp numbers.
According to police, these apps attracted users to take loan at lower interest rates and even promised a 90-day interest-free period. However, after giving the loan amount, they started charging a much higher interest rate on a per day basis.
“At the time of downloading the app, it asked for permission to capture the contact list, photo gallery and other personal data of the phone of the loan seeker. As soon as the permission was granted by the loan seeker, all his/her data got transferred to Chinese servers,” DCP Malhotra further said.
One team used to track the loan seekers and after a day, they started calling the loan seekers and his relatives, friends, others, using different mobile numbers asking to make payment. They also began sharing morphed vulgar photos of the loan seekers to their family members, relatives and friends to intimidate the victims to pay more and more money.
After trapping the victims, they sent their details to the recovery module which after milking the victim dry handed over the baton to their financial team which then transferred the money to China. Not just the money but people’s data was also being directly transferred to Chinese servers, the investigation has revealed.