COVID-19: Chinese loan app trap drives Keralites to desperation

Thiruvananthapuram: Keralites were particularly hit hard during the peak of COVID-19 shutdown as hundreds of thousands had to return home from abroad, owing to loss of jobs or for quarantine.

The severe financial crunch has led to a new social issue for the state: hundreds of cash-strapped Keralites who opted for instant loans through Chinese loan apps are now facing threats and social media shaming, driving at least one person to suicide.

App that traps

India’s central bank, the Reserve Bank of India permits offering loans through digital applications by banks and non-banking financial corporations, but most of the fraudsters operate parallelly, with no permissions taken.

Those who opt for loans through Chinese apps – called by that name because it is believed the apps are by fraudsters in China – receive only a fraction of the money they are promised, they are charged processing fees at the time of disbursal, and repayment falls after just seven days.

Those failing to pay up will have their photos shared in their family and workplace social media groups, a tactic that has driven many to desperation.

Personal info compromise

Almost all of these apps demand that the loan applicant provide all personal information including their social and workplace telephone contacts, their social media access and even permission to track their geographic location.

Says Nandakishore Harikumar, CEO of Technisanct, a company that operates in the cybersecurity domain and works with police departments in different Indian states: “These companies take a wide range of permissions from the loanees before sanctioning the loan.

“And police find it difficult to file cases both because the operators behind these apps are hard to trace and the complainants have actually given permission to the app company to share info with their social media contacts.”

Threats and shaming

As soon as a loanee delays in loan repayment, threats come from the app company. Non-compliance has serious consequences. Defaulters are shamed by posting the loan default details in all their family and workplace social media groups.

A young man in Malappuram district who took an app-based loan and delayed in repayment had to face the ignominy of his wedding card being scanned and sent to his potential in-laws showing him as a loan defaulter.

A social issue

Sebastian Varghese, a financial advisor who is presently helping dozens of people who have landed in Chinese app troubles, told Gulf News that the companies can be really vicious in dealing with their clients who delay repayments.

“A teacher in Thiruvananthapuram district had porn visuals sent to his contacts, by the app company. Sometimes, the app company pastes a ‘loan defaulter’ sticker on the forehead in the defaulter’s photo and shares it with all his contacts”, says Varghese.

Varghese got involved in helping loan app victims when some of his own friends got entangled. “Initially I knew only a few but that was just the tip of the iceberg. Now over 600 people have contacted me”, says Varghese who gives financial and legal service to those who have landed in loan app traps.

Focus on South India

One feature of the loan scam is that the app companies are targeting people in the south Indian states.

Cases have predominantly been reported from Kerala, Karnataka, Telangana, Andhra Pradesh and Tamil Nadu. In Telangana, a government official and software engineer committed suicide following harassment by loan app companies.