Brazen scam: high interest rates, hidden fees

People often take out loans without reading terms and conditions and play into online lenders’ hands, says Prakasam SP

People often take out loans without reading terms and conditions and play into online lenders’ hands, says Prakasam SP

Struggling to meet medical expenses, Vimala, 25, from Pelluru on the outskirts of the city, surfed the internet on her mobile phone for a cash advance of Rs 3,500. She was satisfied because with minimal documentation, the required amount was credited to her savings bank account through the united payment interface in no time. But her happiness was short-lived as she was harassed in various ways by company staff, she recalls.

Although the interest rate is relatively high compared to that charged by commercial banks, she accessed the digital loan application for the speed with which the loan was sanctioned without having to run from pillar to pillar. Another says the woman who repaid the debt paying 1,225 rupees for a one-week trial in May. Again after a week, she got a cash loan. She gave permission to access her confidential personal information on her mobile including social media contacts, location as well as Aadhaar map and other details. She was unable to repay her debt on time and trouble began for unsuspecting women as loan application staff abused access to data by sending obscene messages to her husband, brother and other relatives. She was forced to pay 1,400 rupees as interest for a period of one week carrying all the humiliation. Then she approached the Ongole Taluka police for help.

26-year-old Sumathy (name changed) from Cloughpet in the city got even worse after downloading another quick loan app by submitting copies of Aadhaar card, PAN card and bank account details to ‘saving. She uninstalled the app after receiving a message that her loan application had been rejected. Trouble started for the unsuspecting woman a week later. She was shocked to receive a message from the company asking her to immediately repay a loan of 5,000 rupees with penal interest. She pleaded with company staff by cell phone that she had not taken out any loans and provided a screenshot of the bank statement. But the harassment of staff did not stop. Following this, the woman approached the Ongole II police.

Prakasam Police Superintendent Malika Garg, who has assembled a team to solve such cases, observes that gullible people who are desperate to get a loan quickly share all personal information, including their contacts and phone pictures. laptop, with loan application companies without reading terms and conditions and end up paying high interest rate and hidden charges including processing fees. A first experience can be good. But the bullying starts later. “Loan seekers face online harassment in the form of threatening calls, WhatsApp text messages and even calls to friends and family in an attempt to shame them. Every week these companies double the interest rate and if borrowers do not repay, company staff message the names on the contact list.In many cases, calls are made from international destinations and difficult to track, explains- she.

“A necessary law”

NVS Ramamohan Rao, secretary of HELP, an NGO, says strict legislation to control usurious money lending by private lenders is the need of the hour. Money lenders are not required to register with any authority and are rampant in unethical practices, he adds.

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