An employee of the Telangana Department of Agriculture and a software engineer died by suicide last week after being humiliated and blackmailed by callers and debt collectors from a mobile app instant loan company. Their personal details were posted by the company on social media and called them defaulters and used abusive language.
What is the case of instant loan applications?
It is a racket in which instant personal loans are offered through mobile apps at exorbitant interest rates by unauthorized lenders. Of the many apps available on the Google PlayStore, most are unrelated to any bank or non-bank financial institution. A customer can avail a loan within minutes after uploading personal information, three-month bank statement, copy of Aadhar card and copy of PAN card on the app. Loans ranging from less than Rs 1,000 to Rs 50,000 can be availed for seven days.
The interest rate is as high as percent with exorbitant fees. For example, if a person applies for a loan of Rs 5,000, the application company will charge Rs 1,180 as processing fee and GST and credit only Rs 3,820. The loan companies have call centers in Hyderabad and Gurugram from the callers and recovery agents interact with the burrowers. Many people who have lost their jobs during the pandemic or need money urgently have borrowed money from apps and found themselves caught in the vicious circle of debt trap.
What are the apps? Who uses them?
Telangana and Andhra Pradesh Police have identified the following mobile apps that offer 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, Free credit.
Two companies named Onion Credit and Credfox Technologies have designed Cash Mama, Loan Zone, Dhana Dhan Loan, Cash Up, Cash bus, Mera Loan and Cash Zone apps. K Sharath Chandra and K Pushpalatha are CEO and Director of Onion Credit Pvt Ltd and CredFox Technologies Pvt Ltd respectively; while B Vasava Chaitanya is the director of Cred Fox Technologies Pvt Ltd. They have offices at Raidurgam in Hyderabad.
What is the modus operandi?
Once a client downloads an application and uploads the requested documents, the loan amount is credited to the bank account. The customer’s phone number along with the numbers of his family members are shared by the app company with others. After a customer uses a loan, the callers and agents of about 20-30 similar apps call the customers and urge them to avail more loans, saying they are eligible because their information is identification have been verified by the company from which they borrowed the first loan. . Many customers have succumbed to this trick and ended up borrowing up to Rs 50,000. While the interest rate is 35%, after the due date, a fixed penalty of Rs 3,000 per day is imposed to the client. Many customers end up borrowing more to pay off a previous instant loan.
How were the victims affected?
In addition to imposing heavy penalties for failure or delay in loan repayment, agents use a combination of coercion, blackmail and threats. After granting loans to customers from their app for seven days, they divide all customers into different bucket categories. On a due date, it is referred to as bucket D-0; after the due date from day 1 to day 3, it is bucket S1; from day 4 to day 10, it is bucket S2; and from day 11 to day 30 it is bucket S3.
The treatment of a client depends on the compartment in which the client is located. Immediately after the due date, a customer will be harassed by dozens of calls. During bucket S2, abusive calls will be made to family members. Later, the threats and blackmail begin. Finally, they access the contacts of relatives and friends of customers and send them WhatsApp messages defaming the defaulter. Unable to bear the humiliation as two people took their own lives, several people complained to the police after which the Cyberabad police put an end to the racketeering. Andhra Pradesh Police have also issued a notice not to avail loans from these 30 mobile apps.