A new type of digital loan app scam has started to plague India. Here, scammers ask victims to download an app to get loans on attractive terms and then harass, threaten and even blackmail them. Learn more about this online trap and how not to fall into the trap.
With the rise of digital infrastructure, there has also been an increase in digital crimes. Among them, digital loan app scams have become a particularly dangerous and heinous cybercrime. Scammers create loan apps and advertise attractive loan repayment terms to trick victims. Once a victim downloads and takes out a loan, the loanee is immediately bombarded with harassing text messages, WhatsApp text messages and phone calls threatening quick repayment, often for a much higher amount than previously agreed. If the victim refuses, they even go so far as to blackmail them into calling and harassing their friends and family. This dangerous scam has also driven people to commit suicide to escape humiliation in front of friends and family. Make sure you never fall for the trap. Read on to find out how this scam spreads and how you can protect yourself.
According to a report by the BBC, the case of Raj (name changed) highlights the modus operandi as well as how these digital loan scams can really affect people. Raj, a Pune-based man, was attracted to one of these scam apps because of its simple process and attractive interest rates. He decided to take a loan of around Rs. 8,500 in March. For this, he had to download an application and present a copy of an identity card to benefit from it. He received the loan very quickly, but only half of the requested amount. But it was three days later that this loan turned his life into a nightmare.
Digital loan scams are pushing people to the brink of suicide
After three days, the company began to demand that he repay three times the amount lent. When they refused, they started harassing and threatening him. With no way out, he decided to take out loans from other financial apps to pay off the first loan. Soon, he had accrued a loan of Rs. 4.5 lakh from 33 different applications.
“I don’t think they will let me go. I’m scared for my life. I get threatening calls and messages every day,” Raj told the BBC. Unfortunately, Raj is just one of many people who have fallen prey to this scam. Sandeep Korgaonkar killed himself on May 4 due to threats and harassment from loan scammers, according to his family who spoke to the BBC.
The Reserve Bank of India (RBI) had identified 600 illegal apps between January 2020 and March 2021. Still, this was not enough as more and more such apps are appearing. The RBI has called on the government to come up with new legislation to help end illegal digital lending. He also suggested setting up a central agency under RBI so that it can vet loan applications. But in the meantime, what can you do to protect yourself from these digital loan scams?
How to protect yourself from digital loan scams
Do not download any financial app unless you know it is from a secure source.
Always try to find out if the digital lending app is backed by a physical bank or is registered as an NBFC as only it is authorized by the RBI to disburse loans.
Never give these apps extra permission like contacts, location etc.
Try not to fall for easy repayment plans and low interest rates. If you need to take out a loan, always go through genuine channels.