India's loan frauds make victims afraid for their lives

Raj thought he would be able to quickly solve his financial problems by taking out a $110 (PS87), loan in March.

India's loan frauds make victims afraid for their lives

Raj thought he would be able to quickly solve his financial problems by taking out a $110 (PS87), loan in March. Instead, it has made Raj's life worse.

This man, who was from Pune, had been lured into one the many Indian digital loan scams.

Raj, not his real name, was attracted to the fast and simple loan approval process. To qualify, he only had to download the app on his smartphone and provide a copy his ID card.

He received money quickly, but not the full amount he requested. Three days later, the company demanded that he repay three times the amount they had loaned.

As he borrowed money from other finance apps, his debts grew. Raj eventually owed over $6,000 (PS4083) spread across 33 apps.

He was afraid to report to police because he was being threatened by the app's creators.

The app developers gained access to his contacts and photos, and threatened to send nude images of his wife to anyone who had his phone.

He has now sold all his jewellery to pay the scammers, but he still fears for his life.

"I do not believe they will let me go. I fear for my life. Raj said that he receives threats calls and messages every day.

This type of scamming on mobile phones has become very common in India. A study done by the Reserve Bank of India, (RBI), identified 600 illegal lending applications between 1 January 2020 - 31 March 2021.

Maharashtra had the most complaints about lending apps during that time, with 572 of them reported to the RBI.

"These apps promise quick loans and hassle-free loans. People are lured into them not realising that their smartphones get hacked, data is stolen, and their privacy is compromised," said Mr Yashasvi Yadav (special inspector general of the Maharashtra Cyber Department).

He adds that he believes it is a fraud because many Indians aren't eligible for legitimate bank loans.

Inspector Yadav says that although the apps are often run from servers in China, the scammers are typically located in India.

He claims that many fraudsters have been caught by monitoring their bank accounts and telephone numbers.

One scammer, however, said that it was easy to avoid detection by Indian authorities.

"App founders, or people like us, who work for them are difficult to trace because we use all fake papers to obtain a mobile number.

"We work from all over India. Many of us don’t have a place to work. All I need to do is have a laptop and a telephone connection. I am one of the operators who has access to more than 10 numbers for threats against customers.

One scammer claimed that they are trained in finding "gullible, needy" people and then lend them half the amount they request. As in Raj's case, the scammer will then demand three times the amount be repaid.

If the victim does not pay, additional pressure is applied quickly.

"The first step in harassing is the second. Next, threaten. Then, threaten.

"Many people don't go before authorities out of shame or fear."

The BBC has received messages from victims, including threats to share the victim's debts with family members and colleagues. Some are even more violent, with threats of making and distributing porn videos using victim's images.

The government has taken steps to combat loan fraudsters. It urged Google in May to examine the apps on its Play app store.

Google is an important component. Nearly all Indians will have Android operating software and can use Play, its app service.

However, they are unable to access these services. The scammers then move on to other places and send simple text messages to market.

The RBI asked the government for new legislation in order to curb illegal lending after its review of digital lending. The RBI has established a central agency to verify applications.

In the next few weeks, the government will likely respond.

Technology for business:

However, any new rules may not be implemented in time for all.

According to his family Sandeep Korgaonkar took his own life on May 4, due to harassment and threats he received from loan fraudsters.

Dattatreya, his brother, said that Sandeep hadn't even taken out any loans. He had only downloaded the app.

Soon thereafter, agents started calling Sandeep's colleagues at work to inform them that he was in bad financial standing. They also altered his images to create nude photos and sent them to 50 of Sandeep's colleagues.

Dattatreya says that the harassment continued even after he filed an official police complaint.

He adds, "His life was a living hell. He couldn't sleep or eat."

The case is being investigated by the police.

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