The Gravity of Chinese Fake Loan App Scam

Adv Anamika Roy Choudhary

In this cyber world getting a personal loan has never been easier with tons and tons of instant loan apps providing customers with instantly approved loans in minutes. There is huge numbers of Apps available in Play store, for users it is difficult to choose the one that fits your needs. Instant loan app provides instant approval of the personal loan and helps customers secure a loan almost instantly.

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One can apply for instant loan on theses apps. Most instant loan app looks an easy to use interface that will help customers to apply for a loan without much hassle. An instant loan app also cuts down the time required and paperwork involved in a loan approval process.

We have compiled a list of best instant loan apps in no particular order that helps in securing a personal loan. This list will help you choose the instant loan app that requires minimum approval time as well as affordable for most.

But it has been seen especially in the Covid-19 crisis that the number of Loan seekers increased rapidly. Online activities increased in the year 2020 thanks to the ongoing coronavirus pandemic which forced people to confine themselves inside their houses.

However, banking frauds and cyber crimes also saw a jump in 2020 as scammers took the advantage of the pandemic.

There was a significant spike in cyber crimes during the Covid-19 induced lockdown with as many as 135 such offences being reported every day on an average in May, the Delhi Police said after analysing nearly 33,000 cases registered until November this year.

The cyber crime unit has analysed these offences to conclude that 62% of them were online financial frauds, 24% were social media harassment that included morphing photos of people and sexual harassment, and the rest 14% were other crimes such as hacking, identity theft and data theft.

During this lockdown, along with the working habits, the modus operandi of the crimes has also changed. No doubt the crime rate has subsided as people are staying back but online frauds have seen an upsurge.

Apart from being interaction/communication interfaces, sometimes these also serve as platforms for criminal elements and eventually end up being the epicenters of immeasurable security concerns.

This working from home has now become an opportunity for cybercriminals to exploit the people through e-mail scams, hacking passwords, phishing, ransom attacks, online sexual harassment, etc.

Chinese fake loan app or to be precise Instant loan app, what’s this app? the most lucrative part is it gives instant loan so anyone who wants a small amount can get this app downloaded from Google playstore . For loan basically bank ask lots of questions, a long process but here no problem just load some ID proof like Pan card and Aadhaar  card and you are eligible for the instant loan.

The question is then why it’s dangerous here these app will charge processing fees, heavy interest rate like 36% to 65% which basically everyone overlook. Further to do payment of earlier loan another app will offer you loan to clear your debts. Slowly slowly you are getting yourself in trouble.

This loan app when was downloaded it asked access  to your contacts then photo gallery and  from there they start stealing your datas. Now you are in their control financially further harassment .using abusive language, blackmailing  extortion of more money as interest charge for defaulting .

The worst victims are the women borrower as the app got access to their data hence morphed  their personal photo into porn material and threaten to leak it online  Lack of digital and data literacy is the primary reason for all of these.

Moreover, the pandemic has made millions of Indians vulnerable to these loan apps. These apps usually target Android phone users between the age of 21 and 40, cyber experts claim.

On 24th March 2020 India’s 1.3 billion of population was under  lockdown which  resulted into 100 billion losing their jobs in April 2020 alone. For financial quick help that is to make ends meet figure suggest millions of  people started downloading loan app which was owned by Chinese companies partnering local firms.

In a hurry to get the money many overlooked the interest rates, penalties and the track record of these lenders. Many started borrowing money from Rs 500 to Rs 5000 but as their demand and dependency rose they stareted defaulting that is when the problem rose. In Nov 2020  many cases of suicide and attempt to suicide came forward.

The  case came of a girl of Tamil Nadu attempting to suicide cause she downloaded an app which was close resemblance to Indian app Udhaar but it was chinese app Udhaar loan. She couldn’t able to pay the loan being a defaulter  the recovery agentstarted calling her and finally  asked her to video call him naked if she cannot clear her loan twitter screen shot provided.

From  8th Dec 2020  reports of suicide started coming to the police sation of Cyberabad and Hyderabad . To name Eddu Shrawan of Narsapur, Kirni Mounika of Siddipet sharing the twitter of Cybercrime CID sharing the video how she was forced to commit suicide.

P Sunil of Rajendranagar, Santosh Kumar of Ramagundam . On 23rd Dec 2020 17 arrest were made by police of Hyderabad and Cyberabad  in 3 centre .

Crime police of Hyderabad raided two Cyber places at Udyog Vihar in Gurugram and three places in Hyderabad resulting in the arrest of 11 people working for Liofang Technologies Private Limited, Hotful Technologies Private Limited, Pinprint Technologies and Nabloom Technologies Private Limited. All these companies used to harass and intimidate their loan defaulters. These companies were controlled by Chinese entities.

A large fraction of instant loan apps have the same software backend but different frontend branding. Chinese investors bring these app in India with showcasing proxy directors .These loan app basically targeted those people whose  hand loan needs were Rs 6000 to Rs 15000. When they were unable to repay the loans, they start threatening and abusing them.

Personal photographs of girls were found in these WhatsApp groups which were morphed and used for blackmail. Using data accessed by the apps, a WhatsApp group comprising the contacts of the customer is created and messages against them are circulated with their photograph and with all kinds of “abuse, sexual overtones,” with a tag of CHOR,FRAUD,420,DEFAULTERetc.,”the CID said.

First Information Report (F.I.R) on this issue

FIR content which highlighting the that loan App Company formed watsapp group and post abusive messages.

0n 23-12-2020 K. Satish lodged a complaint that on financial needs he searched in Google and download cash Tm loan app in Google Play Store and uploaded Aadhar card and Pan card, self authentication photo and taken loan Rs. 3000/- for 7 days and after deducting the amount of Rs. 58/- for GST and processing fee 650/-, and given Rs. 2,292.

After that he received calls from different mobiles numbers and they suggested him to take loans from various loan Apps viz., Gotocash, Moneymore, cashere, Zestcash, Rsrushpro, Dhancash, Krazybean, Mrupee, Mpocket, Smart coin, Like loan,etc,

On believing their words he took total of Rs. 1,10,000/- from 01-12-2020 to 17-12-2020 with a little amount by paying to them. After that he paid loan amount total of Rs 46,000/- till 17- 12-2020.

But the loan was not cleared till date again they asked to pay total amount of Rs. 63484/- to their different apps and harassing and blackmailing me and threatening with dire consequences and also accessed to contact list and threatened to forward personal photo with caption of fraud person.

FIR contents in brief

Sri KallakuriSankarnath on financial needs searched in Google and download Rupee plus app in Google Play store and uploaded Aadhaar and Pan card self – authentication  photo and taken loan of Rs 10000.

On believing their words he has taken total of Rs. 5,73,000/- as loan from 02-11-2020 to 18-12-2020 with a little amount by paying to them.  After that he has paid loan amount total of Rs 3,05,800/- till 18-12-2020. But the loan was not cleared till date again they asked to pay total amount of Rs. 2,67,200/- to their different apps and harassing and blackmailing him and threatening with dire consequences and also accessed to his contact list and forwarding my photo with caption of fraud person and abusing in filthy language and sending obscene messages to my family members through Whatsapp.

On that realised that the unknown persons offering small loan amounts with different apps and collecting huge amounts by the way of harassment and blackmailing and requested for taking legal action.

The police have arrested four people, including Yi Bai, who is also a Chinese national and Chief Operating Officer of the company. Confirming the China connection, superintendent of police CID Cybercrime MD Sharath said”operation of the companies which were raided are controlled from China.This includes handling of the hacked mobile phone data.

The police released a list of instant loan applications with dubious credentials, including Loan Gram, Cash Train, Cash Bus, AAA Cash, Super Cash, Mint Cash, Happy Cash, Loan Card, Repay One and Money Box.

In  its ongoing latest  investigation ,Jan 13th 2021 the Rachakonda police arrested another Chinese national . The 26-year-old Chinese national, identified as He. Jian, alias Mark, is a native of Jiangxi province of China. He was arrested in Mumbai. An Indian, Vivek Kumar, 26, was also arrested by the police.

Chinese national He. Jian came to India in August 2019 on a business visa and joined as a representative on behalf of Chinese nationals Xu Nan, Xu Xinchang and Zhao Qiao.

They are directors of different microfinance companies.They were operating Krazy bean, Krazy rupee, cash plush, Rupee pro, Gold bowl, first cash, real rupee/rupee bear, rupee most, first cash, credit rupee, cool cash, money now, pocket rupee, rupee day, cash goo, cash star, cash bowl, cash just, cool rupee, money rupee, gold rupee, money helper, R cash, Money bell apps.

They were running call centres in Thane and Pune in Maharashtra. The Rachakonda police have seized Rs 30 crore kept in the bank account of the above companies.

DATA THEFT

The data theft came into light when four people ended their lives in Telangana. The complainant alleged that the loan app would steal their details main targets are the women.They used to get access of their pictures and morphed into porn material and threaten to leak it online.

A loan app company will have twenty application if one take a loan from one app they will share it with remaining  19 application who will push you to take more loans. Using the stolen data, the accused would threaten the customer with dire consequences including rape .

The most high profile deaths reported was that of Abhishek Makwana, the writer of the popular Hindi sitcom, Taarak Mehta Ka Ooltah Chashmah. Abhishek died by suicide on November 27 2020 over alleged harassment by a digital lending app.

DEPARTMENT TO INVESTIGATE

This incident led to Research and Analyses Wing and Intelligence Bureau to step in to track the crime source. 

The Enforcement Directorate is also pooled in probe in cases of NCR, Bengaluru, and Pune under the Prevention of Money Laundering act (PMLA)

In Karnataka the loan app fraud case is investigated by (CID) Criminal Investigating Department. If we see all the high profile department are coming together to crack down this loan app fraud.

Writ petition in Supreme Court

Pravin Kalaiselvan, Chairman of SAVE THEM INDIA FOUNDATION has approached the Supreme Court of India to get digital lending apps banned in India.  

The petitioner had also submitted that China was monitoring and surveilling over the Prime Minister, President, Judges and other persons holding key position.

“People are getting stressed. Their self-respect is destroyed by these online lending apps. We are gathering all suicide data and submitting to the Supreme Court,” says Praveen, who had first approached the RBI.

According to Section 45-IA of the RBI Act, 1934, a Non-banking Financial Company can function only after due registration, in addition to having a net-owned funds of Rs 25 lakh. Even chit fund companies have to be registered under the Chit Funds Act.

However the Supreme Court on 3rd Feb 2021 dismissed the writ petition and asked the petitioner to approach centre with representation to appropriate ministry as this is not a judicial matter.

RBI on March 27, 2020 issued a moratorium on payment of instalments of term loans falling due between March 1, 2020, and May 31, 2020 due to the pandemic. Later, the moratorium was extended till August 31 this year.

However, as these apps are illegal and are not registered with the RBI, they do not follow the law.

RBI has set up a working group to examine all aspects of digital lending activities to help it implement an appropriate regulatory framework.

In December, the apex bank had cautioned people not to fall prey to the unauthorised digital lending platforms and mobile apps.

Google blocked Loan App

The Ministry of Electronics & Information Technology (MeitY) has received a number of public grievances against frauds and the malpractices by few online instant loan applications available on internet, including Google Playstore, Minister of State for Electronics and IT Sanjay Dhotre said in a written reply to the Lok Sabha.

“Upon being notified by law enforcement agencies of the availability of certain money lending apps that were possibly not in compliance with the applicable legal and regulatory framework, Google has already removed about 100 such apps since December 2020 till January 20, 2021,” he said

Internet giant Google has started to eliminate personal loan apps that do not comply with the Reserve Bank of India’s (RBI’s) guidelinesfrom its Android Play Store following orders from the banking regulator to keep a watch on the excess of fintech applications hosted on the search giant’s platform.

Suzanne Frey, Vice President, Product, Android Security and Privacy, in a blog post said: “We have reviewed hundreds of personal loan apps in India, based on flags submitted by users and government agencies.

MODUS OPERANDI

1. Always see to that  how the lender is calculating your credit eligibility. Credit history is a key indicator for lenders to the risk attached . If a lender is not much worried about your credit history, then it is a risky borrowing and you may be subjected to a lot of harassment from debt collectors and strangers.

2. Details of lenders, local addresses, partnerships and ownership details are critical in adjudging the legitimacy of a lender. Check if the lender is connected to a bank or an NBFC. Make sure it has RBI’s mobile-only NBFC licence. It is also important to see if the lenders have physical addresses and working telephone numbers.

3. Turnaround time and type of transactions are another way to find out if the lender is genuine or not. If the lender presses you to accept the loan amount immediately and approves the loan within seconds, be wary of him. Do not fall prey to any sort of deadlines or urgency. Also, do check how the lender is processing the loan amount to you. If it is via a safe payment gateway or a bank transfer, it is considered relatively safer.

The probe is still going on and has attention from higher authorities. Google has blocked so many loan app as they are not following.ie. the safety policy and guidelines as laid by Reserve Bank of India.

Our responsibility as a citizen of India we should  be more cautious  its better go to your nearby bank and ask for loan  than to download these fake loan app. Even if one have to go for the app then go for a well-established lender and check its NBFC partner, interest rates, costs and penalties, besides other practices.

Follow the Cybercrime department twitter handle who are making people aware of not to use  and fall prey to these Chinese  fake loan app .Be a responsible citizen and be digitally literate,  this is the utmost demand of the time.

Author- Advocate Anamika Roy Choudhary,  Research Head- Law Insider