Chinese Loan app fraud: 3 legal actions

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Chinese online loan app fraud has become the talk of the town. In a country like India, where the majority of the population is comprised of middle-class people, quick and easy loans can prove to be a life-changing opportunity. Every day, naive Indians fall victim to meager loans. They receive these through Chinese-operated fraudulent lending applications available on the Play Store. Every day, people are becoming victims of fraud totaling hundreds of crores of rupees.

Tales of sorrow of loan app fraud victims

Blinded by needs and helplessness, these poor people would allow any access in exchange for petty amounts, which turns their lives into havoc. Many are dealing with the trauma of harassment, while many have committed suicide. Let us understand this whole Chinese loan app fraud or racket in detail and see what legal actions are available against this.

Many people have come forward with their complaints and tales of sorrow. A woman said unidentified individuals have threatened and harassed her. They were sending her distorted and offensive photos to her family, friends, and acquaintances over social media. She went up to the special cell’s IFSO unit and complained. The complainant said that she had borrowed money through a loan app which she had to promptly pay back. She began receiving threatening calls and messages on WhatsApp from Cash Advance staff members after repaying the money, though.

China Loan app fraud trap

A man reported a similar incident to the Crime Branch of the Delhi Police. As per him, unidentified people threatened and abused his family and relatives. They contacted her via international and domestic WhatsApp mobile numbers to repay the loan obtained through the “Cash Advance” application.
The police claim that the account where the money went had daily transactions of Rs 19.43 crores, whereas the officers were looking into a cybercrime of just Rs. 6500.
Four suspects, including two Chinese nationals, Wu Yuvan Lun and Xia Ya Mau, were detained on January 2 by the Tamil Nadu Central Crime Branch for operating an internet loan application scam in the region. The gang was running a 110-person contact center and eight lending applications out of Bengaluru.

See more: Pay Later Apps in India in 2022

How Do Cyber Criminals Operate?

Multiple fraud cases have connections to Chinese cyber gangs. These sophisticated Chinese cybercriminals are currently scamming Indians through fictitious loan applications after coming up with a novel scheme to trick consumers. Anyone who downloads these applications for a few days receives an immediate loan of money. The program requests permission to access the phone’s contact list, photo gallery, and other personal information.

Following the loan, processing costs are added to the total amount. If the balance is not paid on time, interest and penalties will be imposed, totaling a payback of 200 percent of the loan amount.
If the money is not paid, the call centers threaten the victims. They blackmail them for leaking their personal data. Not only that, they make offensive comments against their contacts because the application accesses all of the victim’s contacts, photos, and other data.
The scammers require Indian bank accounts in order to accept payments because the funds transfer cannot happen straight to Chinese or foreign bank accounts.

Legal actions against the personal loan app fraud

First and foremost, kindly avoid taking loans from such illegitimate apps and sites. Borrow from legitimate and approved lenders, platforms, and intermediaries after thoroughly researching them. Fortunately, one can identify them through multiple negative reviews, a low number of downloads, and the lack of a “verified badge”.
As far as the actions of these so-called recovery agents are concerned, these may amount to serious offenses under the law, like:

  • Hacking/unauthorized access to the phone
  • Violation of privacy
  • Cyber obscenity
  • Criminal intimidation
  • Extortion
  • Forgery
  • Cheating
  • A criminal breach of trust
  • Potentially abetment to suicide

If the bank or the recovery agent is harassing you, you can file a complaint with the police. In the absence of any relief despite the police complaint, one can move to the civil court and plead for relief.
Moreover, one can also file a complaint with the Reserve Bank of India. RBI has strictly laid down specific considerations which the bank and the loan recovery agent must follow. The Reserve Bank may impose a ban on a bank from engaging recovery agents in a particular area.

One can take similar supervisory actions when the High Courts or the Supreme Court pass orders or impose penalties against any bank or its directors, officers, or agents.

Don’t fall into the China loan trap 

If you are facing any trouble, or are a victim of this instant loan app trap, contact your nearest police station, and don’t let the perpetrators harass you. Comment for queries.

The author of this article is a law student at one of the most prestigious law institutions in the country, Maharashtra National Law University, Nagpur.
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