When Raj took out a $110 loan last March, he thought he would quickly sort out his financial problems. But it wasn’t.
The man, who lives in the Indian city of Pune in the state of Maharashtra, is one of hundreds of victims of the internet lending scam, which is growing in the country.
Like many people, Raj (not his real name) was drawn to the speed and ease of credit approval — all he had to do was download an app on his phone and provide a copy of his ID card.
He even received some money, but only half of the requested amount. And, three days later, the alleged company began to demand that he pay three times the amount borrowed.
The man then decided to use other apps to try to pay off what he owed, which ended up exponentially increasing his debts. Until, at one point, Raj owed more than $6,000 across 33 different applications.
The scammers even threatened him demanding payment. Raj claims not to have gone to the police out of fear.
Through the apps, the hackers had access to all contacts and photos stored on the phone and threatened to send photos of his wife naked to all numbers registered on the cell phone if he didn’t pay them what they asked.
The man then decided to sell all of his wife’s jewelry to pay the criminals — and he says he’s still scared.
“I don’t think they will leave me alone. I fear for my life. I receive threatening calls and messages every day”, he says.
This type of scam has become common in India. Between January 2020 and March 2021 alone, a study by the Reserve Bank of India (RBI) — the country’s Central Bank — identified 600 different applications for illegal lending.
The western state of Maharashtra recorded the highest number of complaints related to loan apps: 572 were reported to the RBI.
“These apps promise hassle-free loans, quick cash, and people are lured in without realizing that their phones are hacked, their data is stolen, and their privacy is compromised,” says Yashasvi Yadav, Special Inspector General of Police at the cybercrime department. from Maharashtra.
I believe the scam is spreading because many people in India are not eligible for loans in the traditional banking system.
yashasvi Yadav of the Indian Police
Many of the apps run through servers in China, even though the scammers are in India, says the inspector. Some of the criminals have already been identified by the police by tracing their bank accounts and phone numbers, adds Yadav.
One scammer with whom the BBC report spoke, however, said it was relatively simple to evade detection by the authorities.
“Application developers, or people like us who work for them, are very difficult to trace. We all use fake documents to get a cell phone number.”
“We operate all over India. Most of us don’t have a fixed place to work. All I need is a laptop and a phone connection. Someone like me has over ten different numbers to use to threaten the customer.”
This particular scammer said that “employees” are trained to find “naive and needy” people, who are paid only half the asking amount in financing. As in Raj’s case, the scammer will then demand payment of three times the amount sent. If the victim doesn’t pay, the pressure on him quickly builds up.
“The first step is to annoy. Then to threaten. And then the game of blackmailing the person begins, with the access we have to the phone’s data,” he says. “Many don’t go to the authorities out of shame and fear.”
The BBC had access to some of the messages sent to the victims. Some threaten to tell family and co-workers about the debts, others more aggressive contain threats involving deep fakes — making and distributing pornographic videos using the image of the victim’s face.
The government tried to stem the crime wave by asking Google in May of last year to scan the apps available on its app store.
Almost all smartphones in India run on the company’s operating system, Android. Even after being removed from the platform, however, the scammers continued to claim victims, this time using text messages to advertise the apps.
After the release of its study, the Indian Central Bank asked the government to come up with new proposals to try to contain the scams involving internet lending. The entity was willing to use part of its framework to verify the applications. The government is expected to respond in the coming weeks.
For some, however, the new rules will come too late. According to his family, Sandeep Korgaonkar committed suicide on May 4 due to threats and harassment he had been suffering from scammers behind loan apps. According to his brother Dattatreya, Sandeep had not even asked for credit, but had just downloaded the app.
Criminals began calling Sandeep’s co-workers saying he was in huge debts and manipulating photos of him to create fake images of him in the nude — which were forwarded to 50 of his contacts.
“The harassment didn’t stop, even after he lodged a complaint with the police,” says Dattatreya. “His life of his became hell, he couldn’t sleep or eat.” Indian police are investigating the case.