A 55-year-old bank employee in Bengaluru died by suicide on July 29. Nanda Kumar left behind a note where he listed at least 40 mobile applications and detailed the harassment he faced from their representatives, according to the police.

In the middle of April, 28-year-old *Ranvijay Srivastava was found unconscious in his society park in Lucknow with slits on his wrist. He was lucky to be saved in time. Earlier this year, Telangana witnessed the sixth suicide incident owing to alleged harassment by digital money lending apps.

Loan sharks peaked in the aftermath of the COVID-19 pandemic, which ravaged businesses and put millions into joblessness. They are attacking digital ecosystems by promising quick money to those who are running from pillar to post for either a new job or making quick money to meet expenses.

Google on Thursday (August 25) said it had removed over 2,000 loan apps from India Play Store since January this year for violating terms, misrepresenting information, and questionable offline behaviour.

The China conundrum

The Telangana Police raided offices and call centres in Hyderabad, Bengaluru, Pune and Gurugram in December 2021, from where hundreds of staff members made calls to customers. One of the 14 arrested was a Chinese national who is suspected of being behind 11 of such bogus quick loan apps.

“The RBI has not sanctioned the illicit business of rapid loan apps, which are coordinated by large cybercriminals based outside India, especially China, with the support of their Indian agents," Triveni Singh, SP, Cyber Crime, UP, told CNBC-TV18.com.

He also revealed that the syndicate is mostly based out of China. While most of these fake loan apps are operated by the Chinese, people in India mostly work on a commission basis only as loan recovery agents.

These apps send hundreds of texts, emails, and social media promotion postings daily, providing immediate loans without having to leave the house. Indian agents use Telegram and WhatsApp to contact their targets and request that they download the company's app for verification.

The programme grabs data from the phone as soon as it is downloaded, including contacts, social media, and photographs.

Weaponising personal data

When most apps are loaded on your phone, they demand access to storage, contacts, and the camera and microphone. It is nearly impossible to pinpoint which applications use this information and how. But having unlimited data access can offer loan sharks or bogus apps an advantage when a borrower defaults.

When deadlines are missed, loan defaulters are left without a safety net due to exorbitant interest rates (in some situations, interest rates are as high as 60 to 100 percent) and constant harassment. In many circumstances, loan recovery agents will turn to public slander to recover their funds.

Constant phone calls, making defaulter's information public, and sending threatening emails, and messages, become part of the recovery process, said Prof Singh.

The curious case of re-emerging apps

To protect borrowers against "deceptive and exploitative terms," Google has blacklisted hundreds of such apps from its Android store worldwide. Chinese, Indonesian, and Kenyan officials followed suit, shutting down many businesses that promised quick cash to the unbanked.

But digital lending is proving to be a hard-to-tame market with a huge footprint, said Rahul Sasi, who runs cyber security firm CloudSEK.

Sasi, one of the experts who made recommendations to the Reserve Bank of India (RBI) regarding digital lending apps, said the RBI panel is aware the apps which are shut out by platforms like Google circumvent the restrictions by moving to third platforms or using text messaging to advertise.

The RBI has recommended setting up a self-regulatory organisation (SRO) covering the participants in the digital lending ecosystem.

Time to take cognizance

“Most of these apps are illegal. As per law, a lending company needs to be either a bank or a non-banking financial company (NBFC) and has to be registered with RBI to be able to lend or otherwise have a license as a money lender under the State Money Lenders Acts,” said Rakshit Tandon, a Cyber Security Expert and Cyber Security Consultant to Internet and Mobile Association of India (IAMAI).

These loan sharks now take advantage of social media marketing. They track Google advertisement searches to exploit the unmet need for credit and target vulnerable borrowers.

“The Indian Cyber Crime Coordination Centre (I4C) has taken cognisance of this situation and is constantly talking with Google to track these. And to keep targeting such bogus apps on their play store,” said Tandon.

Most instant money loan shark apps intimidate buyers with a downgraded credit score and urge them to take up another loan to pay off the first one.

And thus begins the vicious cycle of “ever-greening”.

“I took a quick loan of Rs 3,500 but had to pay Rs 12,000 interest on it. I lost my father due to a heart attack after they kept calling him and threatened with dire consequences for my mother and me,” said *Ankush Natani.

There needs to be a stricter crackdown against these loan sharks, said Natani, or we will keep losing people to harassment and humiliation at the hands of instant loan app companies.

(*Names have been changed to protect the identities of cyber fraud victims)

First Published:Aug 27, 2022 11:30 AM IST