Ruzbeh Raja is an Information Technology Consultant with over 20 years of experience in the IT industry. He is also a Visiting Professor of Law in the University of Mumbai.

Get Rs. 25,000 cash instantly from Chinese Loan Apps! But what’s the catch?

There are many Apps online which give you small and micro loans without much KYC or documentation. There are several loan apps on the various App Stores which promise to give you an ‘Instant Loan’, ranging from Rs. 5,000 to even Rs. 1 Lakh! They give you the loan or money instantly, but there’s always a catch to it. They steal your data and use it to arm-twist you into paying very high rates of interest.

What are Chinese Loan Apps?

Chinese Loan Apps are mobile applications that offer quick and easy access to short-term loans, often with high-interest rates and minimal documentation requirements. These Apps have gained popularity in India, particularly among individuals who lack access to traditional banking services or have urgent financial needs.

How Chinese Loan Apps operate in India

Chinese loan apps typically operate by leveraging technology to provide instant loans to users through their smartphones. Users can apply for loans within minutes using the app, and if approved, the funds are transferred directly to their Indian bank accounts. These apps often target vulnerable segments of the population, such as students, low-income earners, and individuals with poor credit histories.

How do these loan apps make money?

Apps offering instant loans require you to give very wide phone permissions and allow them full access to all the data or services on your phone. Chinese loan apps often collect a significant amount of personal data from their users during the loan application process. This data can include information such as financial records, contact lists, and location data. Some loan apps may monetize this data by selling it to third-party companies for targeted advertising or other purposes.

Chinese Loan Apps – A Bad Idea: There are several concerns associated with Chinese loan apps in India:

• High-interest rates: Many Chinese loan apps charge exorbitant interest rates, sometimes as high as 30% per month, which can trap borrowers in a cycle of debt.
• Unethical practices: Some loan apps use aggressive and unethical tactics to recover debts, such as harassing borrowers and accessing their contact lists to shame them into repayment.
• Data privacy and security: The often collect sensitive personal information from users, raising concerns about data privacy and security. There are instances when these apps have misused or sold user data without consent.
• Lack of regulation: The rapid proliferation of Chinese loan apps in India has outpaced regulatory oversight, leaving borrowers vulnerable to exploitation and abuse.

How to protect yourself from the risks associated with Chinese loan apps:

• Research thoroughly: Before downloading any loan app, research its reputation, read reviews, and check if it’s licensed by regulatory authorities.
• Read the terms and conditions: Carefully read the terms and conditions of the loan app, including the interest rates, repayment terms, and data privacy policies, to avoid unpleasant surprises.
• Borrow responsibly: Borrow only what you can afford to repay. Avoid taking multiple loans from different apps, to prevent falling into a debt trap.
• Report suspicious activities: If you encounter any suspicious / unethical practices by loan apps, like harassment or misuse of personal information, report them to the appropriate authorities.

Important: Do NOT share your Aadhaar or PAN details with unknown Apps / Apps offering instant cash, with little verification. Remember, if the deal sounds too good to be true, then it probably isn’t true and it is a trap for you.

Real World Example:

Sorab, an office clerk urgently needed Rs. 25,000/- to pay off some bills. He downloaded some Loan Apps which immediately paid him Rs. 5000/- into his bank account @ 12% interest per annum. All they did was ask him to install their App on his phone and share photos of his PAN and Aadhaar Card for address verification. He installed 5 of these Apps, collected the Rs. 25,000/- and paid off his bills. 15 days later, he received a notification on his phone, asking him to pay Rs. 1,000/- as verification fee by one of the Apps. When he refused, they immediately sent him WhatsApp messages threatening him with dire consequences, even threatening him that they had a copy of his entire contacts list and every photograph in his phone!

As a sample, they sent him a photograph of himself from his phone gallery, a screenshot of his contacts list and also his recent calls. They also told him that if he did not pay the fee as demanded, they would morph his personal photographs and send his nude photographs to his friends and relatives from his phone book. When he blocked their phone number on WhatsApp, they started sending messages from other phone numbers. They knew whom he was calling, they knew which SMS had come into his phone and they could also see which websites he was visiting from his phone! They also had access to his phone’s GPS location and his phone’s camera!

How did they get control of his phone?

The phone app which they made him install, required several permissions before it would install on the phone. Out of those permissions, Suresh himself had allowed the phone camera, location, SMS, call log and screenshots to be controlled by that Loan App. This enabled the Chinese Loan Apps to have full knowledge of his whereabouts and what he was up to. Suresh was thus caught in the trap of the Chinese Loan Apps…

Here’s hoping that this cyber security awareness will help you stay safe from such digital disasters!