Scam Apps and Fake Lenders

Scam Apps and Fake Lenders

It's important to rein in unlawful loan apps and increase consumer awareness

Struggling with the Pandemic

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

We now have apps for everything, be it music or reading, photo editing or banking, or other financial matters. The pandemic accelerated the use and our dependence on mobile devices.

The pandemic affected people’s lives all over the world, with many losing jobs; some continued to work with minimal pay. Countless people were left helpless trying to make ends meet and maintain a decent lifestyle.

Faced with a genuine cash crunch and personal losses, many people found themselves grappling with financial issues. More and more people are downloading loan apps to help them come out of sticky financial situations. Lending apps are all sitting in a mobile Play Store or App Store.


“What attracts vulnerable people who are already struggling with financial problems is the claim of easy processing of loans. Also, they ask you to submit all kinds of official and personal documents such as Aadhaar card, PAN card, voter ID, etc. All these documents contain vital information and once the fake app companies have secured this information, they use it against the borrower if they delay in paying back their dues,” says Mr Satyam Kumar, CEO and Founder of LoanTap.

Instant digital loan apps have become traps for innocent people and are being used for cheating and harassing people. A lot of these fake companies have taken on the names and identities of genuine NBFCs and lenders and look and sound just like them. Distressed borrowers do not really pay attention to how genuine these sites are and that is where they fall prey to these thugs. These fake loan apps resort to social shaming on social media sites, extortion, and threats of various kinds, and borrowers find themselves absolutely helpless.

Reining in Unlawful Apps

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 been working with the larger internet/digital ecosystem to identify such predatory and unlawful apps.

“It is most unfortunate that repeated instances of such unlawful apps harm the customers and undermine overall trust in digital lending. Therefore, we must double down our efforts through a multipronged coordinated 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 a comprehensive framework to monitor apps for harmful practices at entry-level and beyond and bring them to the notice of government bodies. As recommended in the RBI Working Report, the customers too need greater awareness and access to tools like app certification and a publicly available list of unlawful apps 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 continuously work to ensure that borrowers access digital credit in a dignified, safe, secure, suitable, responsible and transparent way.


Mr Satyam Kumar, CEO and Founder of LoanTap and Founding Member of FACE, said: “No matter how critical the situation one finds in, as far as cash crunch is concerned, there should be no compromise on verifying the identities of the lending companies you are borrowing from. Any banks or NBFCs (non-banking financial companies) have to be registered with the RBI to be a lender or have a licence as a moneylender under the State Money Lenders Act. While Google Play Stores and other Mobile App Stores have tried their best to block scam lenders, they always tend to come back with a new identity. As a borrower, one must remember, that if the lender is not asking you for your credit history or is pressuring you to finalise as soon as possible, then those should be your red flags to know that something is fishy.”

Need for Consumer Awareness

When there are new avenues opening because of the growing adoption of digital banking and credit facilities, at the same time there is also the threat of fraud and unlawful activities by fake players. It becomes very important for us, as consumers, to stay aware, alert, and spread awareness. On the one hand, we have to be open enough to adopt the new development and take advantage of it and at the same time, we have to be careful not to fall prey to fake apps.

Read more about LoanTap here.

The Federal takes no editorial responsibility for this content.

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