Fraudulent apps and fake lenders

Fraudulent apps and fake lenders

Fight against the pandemic

Digitization has taken the world by storm and literally changed the way we live, transact, interact and consume content, media and entertainment. We are all addicted to our mobile phones and use them for all kinds of work including banking and financial transactions.

We now have apps for everything from music or reading, photo editing or banking, to other financial matters. The pandemic has accelerated the use and our reliance on mobile devices.

The pandemic has affected the lives of people all over the world, with many job losses; some continued to work at minimum wage. Countless people have found themselves helpless trying to make ends meet and maintain a decent lifestyle.

Faced with a real shortage of cash and personal losses, many people have found themselves in financial trouble. More and more people are downloading loan apps to help them out of tricky financial situations. Lending apps are all hosted in a Play Store or mobile App Store.


“What appeals to vulnerable people who are already struggling financially is the demand for easy loan processing. Also, they ask you to submit all kinds of official and personal documents like Aadhaar card, PAN card, voter ID card etc. All these documents contain vital information and once the fake app companies secure this information, they use it against the borrower. if they are late in repaying their due, said Mr. Satyam Kumar, CEO and Founder of LoanTap.

Instant digital loan apps have become traps for the innocent and are used to deceive and harass people. Many of these fake companies have taken on the name and identity of genuine NBFCs and lenders and look like them. Distressed borrowers don’t really care about the authenticity of these sites and that’s where they fall prey to these thugs. These fake loan apps resort to social shaming on social media sites, extortion and threats of all kinds, and borrowers are left absolutely helpless.

Control illegal applications

Providing a safe and secure environment for digital lenders is a collective responsibility. Industry bodies like FACE (Fintech Association for Consumer Empowerment) and several digital lenders have worked with the wider internet/digital ecosystem to identify these predatory and illegal apps.

“It is very regrettable that repeated instances of such illegal apps are harming customers and undermining overall trust in digital lending. Therefore, we need to redouble our efforts through a coordinated multi-pronged approach. Such an approach will require working with key stakeholders – regulators, government, lenders and a broader digital lending ecosystem such as app hosting and payment platforms to put in place a comprehensive framework to monitor harmful apps at the entry level and beyond and bring them to the notice of government agencies.As recommended in the RBI Working Report, customers also need greater awareness and access to tools such as application certification and a publicly available list of illegal apps so as not to fall prey to such apps,” said Ms. Sugandh Saxena, CEO of FACE.

All FACE members are part of a regulated ecosystem and operate within the Code of Conduct (CoC). They work continuously to ensure that borrowers access digital credit in a dignified, safe, secure, responsive, accountable and transparent manner.


Mr. Satyam Kumar, CEO and Founder of LoanTap and Founding Member of FACE, said: “No matter how bad the situation is, when it comes to the cash crisis, there should be no compromise on verifying the identity of the loan companies you borrow from. All banks or NBFC (Non-Banking Financial Companies) must be registered with the RBI to be a lender or hold a license as a pawnbroker under the State Money Lenders Act.While Google Play Stores and other mobile app stores have tried their best to block fraudulent lenders, they always tend to come back with a new identity.As a borrower, you must remember that if the lender does not ask you for your background credit or pressuring you to finalize as soon as possible, then these should be your red flags to know something is wrong.

Need for consumer awareness

When new avenues open up due to the growing adoption of digital banking and credit services, there is at the same time the threat of fraud and illegal activities by fake players. It becomes very important for us as consumers to stay aware, alert and educated. On the one hand, we have to be open enough to embrace and take advantage of the new development and at the same time, we have to be careful not to fall prey to fake apps.

Learn more about Loan Tap here.

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