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This Is How You Can Avoid Fraud While Using Loan Apps

Image Source: fizkes / Shutterstock

The Competition Commission of Pakistan (CCP) warned the general public about the rising trend of mobile-app-based micro-credit and nano-loan facilities.

The users can quickly get access through Google Play store and App Store. The aim was to offer short-term financing to borrowers, but currently, the app faces multiple complaints and challenges in its track-and-trace process.

The CCP has initiated an inquiry against the challenges the app is facing, which are observed to change their premises behind such applications constantly.

However, the CCP believes it is essential to inform the public about the multiple issues seen and how to avoid them up until the investigation is finished.

Additionally, CCP has made this information known to SECP, FIA, and PTA.
It is a fact most of these applications need to comply with Pakistan’s regulatory framework. Therefore, it is essential first to confirm that the applications from which users are borrowing are officially registered and are operating under a regulatory regime.

Here it is important to notify that these applications may ask for complete control of the user’s device by sending an option to agree to standard access permissions for the app.
This will affect the user’s privacy and make the user vulnerable to the operator of such applications.

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Therefore, the super needs to be proactive while reading the terms and conditions displayed to make an informed decision.

While applying for a loan through these applications, a user is requested to fill up the basic requirements, terms, and conditions.

These terms will outline the period for which the loan is extended, deductions made from the total loan requested, the amount of loan disbursed, payment and repayment methods, and other essential charges.

However, these terms and conditions are frequently at odds with what is advertised, resulting in deception or fraud.
Moreover, the application process requires the user to provide at least two emergency contact details considered collateral by the operators.

Recovery has allegedly been known to commit fraud or harass borrowers and their contacts for repayment.
The CCP wants to inform the general public about the fraud and calls the lenders will make for the loan recovery.

To avoid facing any uncertainty or fraud, it is essential to know that there have been instances where recovery agents have provided their personal account details rather than the lender’s valid account.

Therefore, consumers must be cautious while making such decisions and only make payments on the registered accounts of the mobile app-based micro-credit and nano-loan facilities.

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When using apps for micro-credit and nano-loan, CCP strongly advises the public to use caution and due diligence.
According to the analysis, the general public includes the most vulnerable consumers from the lower to middle-income classes. They have downloaded these applications over 10 million times.

Image Source: fizkes / Shutterstock

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