Explained: What is the instant loan apps case? How were victims lured?
Of the numerous apps that are available on Google PlayStore, most do not have any tie-up with any banks or Non-Banking Financial Institutions.
A woman employee of Telangana Agriculture Department and a software engineer died by suicide last week after they were humiliated and blackmailed by tele-callers and recovery agents of a mobile app instant loan company. Their personal details were posted by the company on social media and labelled them defaulters and used abusive language.
What is the instant loan apps case?
It is a racket in which instant personal loans are offered through mobile apps at exorbitant interest rates by unauthorised lenders. Of the numerous apps that are available on Google PlayStore, most do not have any tie-up with any bank or Non-Banking Financial Institution. A customer can avail a loan within a few minutes after uploading personal details, three months’ bank statement, Aadhar card copy and PAN card copy on the app. Loans from as less as Rs 1,000 to Rs 50,000 can be availed for seven days.
The rate of interest is as high as per cent with exorbitant fees. For instance, if a person seeks a loan of Rs 5,000, the app company will charge Rs 1,180 as processing fees and GST and credit only Rs 3,820. The lending companies have call centres in Hyderabad and Gurugram from tele-callers and recovery agents interact with burrowers. Many people who lost their jobs during the pandemic or who require money urgently borrowed money from the apps and got caught up in a vicious cycle of debt trap.
Which are the apps? Who is operating them?
The police in Telangana and Andhra Pradesh have identified the following mobile apps which are offering instant loans. Cash Mama, Loan Zone, Dhana Dhan Loan, Cash Up, Cash bus, Mera Loan, Hey Fish, Monkey cash, Cash Elephant, Water Elephant, QuickCash, Kissht, LoanCloud, InstaRupee Loan, Flash Rupee-Cash Loan, Mastermelon Cashtrain, GetRupee, ePay Loan, Panda iCredit, EasyLoan, RupeeClick, OCash, Cashmap, Snapit, RapidRupee, ReadyCash, Loan Bazaar, Loanbro, Cash Post, Rupeego, Cash Port, RsRush, Pro Fortune Bag, Rupee Loan, Robocash, CashTM, Udhaar Loan, Credit Free.
Two companies named Onion Credit and Credfox Technologies have designed the apps Cash Mama, Loan Zone, Dhana Dhan Loan, Cash Up, Cash bus, Mera Loan and Cash Zone. K Sharath Chandra and K Pushpalatha are CEO and director respectively of Onion Credit Pvt Ltd and CredFox Technologies Pvt Ltd; while B Vasava Chaitanya is the director of Cred Fox Technologies Pvt Ltd. They have offices in Raidurgam in Hyderabad.
What is the modus operandi?
After a customer downloads an app and uploads the documents demanded, the loan amount is credited into the bank account. The phone number of the customer as well as numbers of his family members are shared by the app company with others. After a customer avails one loan, tele-callers and agents of about 20-30 similar apps call the customers and lure them into availing more loans, saying they are eligible because their credentials have been verified by the company from which they borrowed the first loan. Many customers fell for this trick and ended borrowing up to Rs 50,000. While the interest rate is 35 per cent, after the due date, a flat Rs 3,000 penalty per day is levied on the customer. Many customers end up borrowing more to repay a previous instant loan.
How were the victims affected?
Apart from levying hefty penalties for failure or delay in repayment of loan, the agents use a combination of coercion, blackmail, and threats. After issuing loans to customers from their app for seven days, they divide all the customers into different categories of buckets. On a due date, it is called as D-0 bucket; after the due date from day 1 to day 3, it is S1 bucket; from day 4 to 10, it is S2 bucket; and from day 11 to 30, it is S3 bucket.
The treatment of a customer depends on which bucket the customer is in. Immediately after the due date, a customer will be harassed with dozens of calls. During S2 bucket, abusive calls will be made to family members. Later, threats and blackmail start. Finally, they access the contacts of relatives and friends of the customers and send them WhatsApp messages defaming the defaulter. Unable to bear the humiliation while two persons have died by suicide, several people lodged police complaints after which Cyberabad Police busted the racket. The Andhra Pradesh Police has also issued an advisory not to avail loans from these 30 mobile apps.