What you should know about Scams in Instant loan Apps?

Credits: witn

Recently RBI issued notice to some digital lending platforms for harassing borrowers for small loans that they availed through them which includes blackmailing by using their personal information that lenders collected while processing their loans and charging hidden cost which was not disclosed earlier.

Usually, these apps promise to provide instant funds without much due diligence and in hassle-free experience and individuals /businessmen fall prey to such offers owing to fact that the Covid-19 pandemic has disrupted their businesses and most of them are in deep financial stress thus making them most vulnerable to these Scams which are floating around. In today article we’ll be talking about the Recent RBI action on these fishy loan apps and how you can protect yourself from these lenses whose sole objective is to defraud customers

What is going around?

Before discussing what exactly is happening nowadays we’ll understand how exactly an Instant loan app works.

Let’s say Mr. Rahul is in desperate need of Funds and due to a bad CIBIL score, no bank/Nbfc is ready to give him a loan considering this. So Rahul applies to a personal loan app that promises to give funds within 10 minutes by collecting very basic data like personal information, KYC documents like Aadhaar card, pan card and ask him to click a selfie for verification alongside they’ll take access of his gallery, contacts and certain apps. Now after giving all documents and giving access the app processes the loan and Rahul receives the funds and he’s a happy lad now. But unaware of high-interest charges, an additional cost that will be levied upon him, and mental stress that he’ll put through.

What the issue then?

Assuming he repaid the full loan that too with interest things are good but problems start when Rahul defaults on his repayment and harassment starts from here onwards. The lenders start sending fake and morphed notices to the borrowers and blackmail them. In some cases, WhatsApp groups were created along with contacts of the borrower and they started abusive behaviour, labelling them as “fraudsters”.

 The lenders make sure that the defaulter is pressurized and stressed at that level where he has no option but to pay the whole loan amount along with the interest rate determined by them. Since most of these digital lenders are working outside the regulator\’s ambit thus Rahul cannot seek any legal help thus resorting him the only option to repay the amount. We’ve seen cases where the borrowers have committed suicide due to constant blackmailing and threat. Most of these entities have an only online presence are mostly operated from China, Indonesia, and Singapore.

How you can protect yourself from these cybercriminals and fake loan apps?

I’m pretty much sure that now you’ll are aware of how these apps are defrauding customers and what is their modus operandi. So to make sure you do not fall prey to these apps I’ve jotted down few points

1. Never avail loan from any app which does not scrutiny your financial background and credit history

In this entire business model, the entire risk is borne by lenders since he’s giving funds from his own end so in cases where lenders aren’t concerned about your credit score and financial status is a red flag and you should immediately report this app.

• Where interest charges are not disclosed

In cases where the app does not disclose the full cost and interest charges levied on your loan amount then you should Never opt for such a facility since you can be charged with a floating rate of interest and you probably can’t do anything later on.

• When the App sources cannot be determined and are operating outside Indian Jurisdiction

Imagine getting a facility from a business that cannot be sued and has no physical presence in your country. This deprives you of any rights if you want to go for a legal route in case you want to file a case against them.

• Online Reviews

While buying anything online we start reading online reviews for it one month prior to the ordering date since we’ve to pay our hard-earned money for purchasing it on the other hand if we talk about loan app we are very careless and opt for anything that we come across since we’re getting money but we forgot that this has to be repaid that too with interest. So make sure whenever you start applying through loan apps for personal loans you are well aware of it.

Conclusion

With loans available faster than Maggi one should be very careful and proactive while taking personal loans from online apps and incase you’re defrauded by such cyber criminals you should report them to your nearest cyber cell.

But when you can’t postpone your plans and the emergency cannot be skipped so don’t worry MoneyLoji got your back. It is 100% verified and is trusted by more than 500K users. It is approved by RBI guidelines and operates keeping in mind the privacy of its users confidential. It not only give access you to funds but also helps you in maintaining good credit score so you don’t have any issues in future for availing credit. So apply for personal loan at MoneyLoji Now!