On August 12, a family in the central Indian city of Bhopal took a selfie at their home. After the photo, his father Bhupendra Vishwakarma forced his two sons, ages 8 and 3, to drink poisoned drink and hanged himself along with his wife.
In his four-page suicide note, Vishwakarma, a 35-year-old man who worked at an insurance company wrote that he was stuck in a vicious cycle of debt from loan apps. The recovery agents had been tormenting him for months, but the last message he received from them sent him into crisis.
There it was written: āTell him to pay back the loan or I will strip him naked and upload it on social media today.ā
Vishwakarma said in his suicide note: āToday, the situation has come to the point where I too will lose my job. I can’t see a future for myself or my family. I don’t have the right to show my face to anyone anymore. How will I deal with my family?ā
Police are continuing their investigation and have so far arrested five people involved in the scam.
The story of Vishwakarma is not unique. Shivani Rawat, 23, a university receptionist in Delhi, faced his own ordeal. In June 2023, she applied for a loan of 4,000 rupees ($48) through an app called Kreditbe., Because her salary was delayed. Her loan request remained pending and her funds were not received. But within a week, he started receiving 10 to 15 calls demanding repayment of 9,000 rupees ($108).
Rawat said he told the collection agency that the money was not in his account. “But they started getting abusive. When I stopped answering their calls, they started sending me abusive texts.”
In August, her colleagues received explicitly doctored photos of her and her family sent to her by a Kreditbe representative. She tried to explain her situation to her colleagues, but the next day her manager told her to resign, saying her presence was making others uncomfortable.
“After I lost my job, I became very depressed and even wanted to end my life,” Rawat admitted.
Al Jazeera attempted to contact Kreditbe for comment, but no information was available about the company, and none of the representatives who had been in contact with Rawat could be reached.
The Kreditbe name is a plagiarism of a legitimate loan app called KreditBee, and a common tactic of these illegal loan apps is to choose names similar to reputable brands to increase credibility. It happens often.
Both Vishwakarma and Rawat borrowed money from loan apps. The app conveniently provides loans to users in just a few clicks, without the extensive documentation required for traditional bank loans. The money is credited to the borrower’s account within minutes, unlike the bank loan which takes him 5-7 days to the borrower who meets high eligibility criteria.
The use of these apps increased during the pandemic as many businesses closed or downsized and a significant number of people lost their jobs and found themselves in financial hardship.
The average loan ticket price on these apps ranges from 10,000 rupees to 25,000 rupees ($120 to $300), with monthly interest rates of 20 percent to 30 percent and fees that can be as high as 15 percent.
Loan app representatives typically begin the recovery process 15 days after approving your loan. However, in many cases, they have been known to start harassing people just four to six days after disbursing the loan, and in Tiwari’s case, even before he actually received the loan.
According to Akshay Bajpayee, an independent cybersecurity expert in Bhopal, there are currently more than 700 loan apps operating in Bhopal, some owned by Indians but most by Chinese, who are targeting Indians. It is said that it employs and operates the company.
Some are outright scammers, taking advantage of promises of quick money from desperate loan seekers and disappearing into the night, while others extort money from innocent people. Not only because of the unscrupulous methods they use, but also because they do not follow the central bank’s regulations regarding online lending, such as annual interest rates and various fees.
The Reserve Bank of India (RBI) has also clearly stated that financial institutions cannot store customer details, except for minimal data such as the customer’s name, address and contact details. However, illegal apps access contact lists and photos, edit them, and use doctored images to blackmail borrowers and collect money.
According to a study conducted by cybersecurity software company CloudSek, from July 22, 2023 to September 18, 2023, its experts monitored 55 fraudulent lending apps targeting individuals. Additionally, we identified over 15 obscure payment gateways operated by individuals from China who took these steps to avoid detection.
Chinese loan apps have also adopted this tactic in Southeast Asia and some African countries. In countries where people’s awareness of cybersecurity and fraud is low, they are more likely to be targeted by such malicious activities.
create fear
“Scammers use various tactics to instill fear in the minds of their victims. Initially, they may access the victim’s contact list and threaten to call them. If the victim resists, They can infiltrate the victim’s photo gallery, manipulate the images and send them back,” said Pravin Kalaiselvan, founder of SaveThem India, an NGO that spreads awareness about cybercrime.
“This causes panic among the victims, who end up complying with the scammer’s demands for money,” he added.
The Loan Consumers Association (LCA), a group of advocates and social workers focused on combating unethical collection practices by banks and apps, has fallen prey to these illegal loan apps over the past three years. It has supported approximately 1,800 people with both counseling and prosecution support. Complaints to the police.
Almost 90 per cent of these individuals were suffering from clinical depression and distress, said Nikkhil Jethwa, a cyber safety expert and founder of LCA. Some people even panicked or started shaking when the phone rang, he recalled.
Escalating complaints
Complaints about digital lending have soared since Prime Minister Narendra Modi put the country under lockdown in March 2020 at the beginning of the COVID-19 pandemic, according to data from Save Them India Foundation.
That year, the foundation received around 29,000 complaints filled with horrifying stories of threatening phone calls and messages from lending app representatives. That number increased to approximately 76,000 in 2021. There were 46,359 complaints received in the first nine months of this year.
According to a survey conducted by LocalCircle from July 2020 to June 2022, 14% of Indians surveyed have used instant loan applications in the past two years. 58% encountered exorbitant interest rates of 25% and 54% of respondents reported experiencing incidents of extortion or data misuse during the collection process.
āGovernment agencies are unpreparedā
In his suicide note, Vishwakarma wrote that he visited the Cyber āāCrime Control Bureau in Bhopal but received no assistance from the police.
A senior police official in Madhya Pradesh, who declined to be named as he is not authorized to speak to the media, told Al Jazeera that police simply are not trained to deal with cybercrime.
āWhile many police officers in cyber police stations lack even basic internet knowledge, cyber criminals are well equipped with the latest technology. This is why most cyber crimes go unsolved. ā he said.
Automated voice attendants are another tool scammers use because companies offering this service do so without strict documentation. Kalaiselvan said this is used to target people who are not active online on sites such as Facebook, where loan apps typically promote their apps.
Many of these scammers use virtual numbers from neighboring countries such as Bangladesh, Pakistan, and Nepal, making them difficult to trace.
“Loan fraudsters are abusing these services, making it difficult for authorities to catch them,” Kalaiselvan said.
According to experts, the names of these apps usually include keywords like ‘easy’, ‘loan’, ‘Aadhar’, ’emi’ etc., making them easy to find through online searches. (Aadhar is a unique 12-digit ID that people in India need to avail banking services).
Additionally, we promote our services on platforms such as Facebook and Google through AdSense, which allows website owners to display targeted ads and grow their user base. When these apps face bans or complaints, they often change their names and other details and re-emerge with new identities.
Loan app scammers extort money through bank accounts, but despite the availability of records, very few scammers are caught, Jeswa said.
One reason is that very few Indians are digitally savvy. According to Oxfam’s India Gap Report 2022, only 38% of households in the country are digitally literate.
āThe government is promoting Digital India, but there is a lack of infrastructure and cyber literacy programs for the people,ā Jethwa said.
Measures taken
In March, the Enforcement Directorate (ED) seized movable assets worth 1.06 billion rupees ($12.76 million) in Bengaluru in connection with financial fraud by Chinese lending apps.
The ED said these companies provide quick short-term loans to the people through loan apps and other channels and charge hefty fees along with unduly high interest rates. They used coercive tactics such as persistent telephone threats and inflicting emotional distress to recover amounts from borrowers.
Google India said in a report that it removed over 3,500 personal loan applications from the Play Store in 2022 for not following policies and regulations. These apps were illegally accessing user data such as contacts and photos.
In September 2022, India’s Finance Minister Nirmala Sitharaman announced that the RBI has created a list of legal apps and the Ministry of Electronics and Information Technology (MeitY) has announced that only these approved apps will be available on Google Play Store and Apple App Store. He said he would try to make it happen.
On February 7, 2023, the Treasury Department announced in response to a parliamentary question that it had transferred a whitelist of approved digital lending apps to app stores such as the Google Play Store and the Apple App Store. However, this statement was debunked by local media who reported that no such list had been sent.
Around the same time, central bank governor Shaktikanta Das said that digital lending apps are not subject to central bank regulation.
In the same month, the government banned 94 lending apps including names like BuddyLoan, CashTM, Indiabulls Home Loans, PayMe, Faircent, RupeeRedee, etc. These apps have been reported by the RBI for various reasons, many of which involved Chinese investors or harassed borrowers.