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Tips to Prevent Fraud When Using Loan Apps

Image Source: fizkes / Shutterstock

The Competition Commission of Pakistan (CCP) has issued a warning about the increasing popularity of mobile-app-based micro-credit and nano-loan services. These services are easily accessible through platforms like Google Play store and App Store. Initially designed to provide short-term financial assistance, these apps are currently facing challenges and complaints in their operation.

The CCP has launched an investigation into these challenges and the shifting nature of these applications. In the meantime, the CCP is emphasizing the need to educate the public about the issues and how to protect themselves against potential fraud.

Furthermore, the CCP has shared this information with regulatory bodies such as SECP, FIA, and PTA. It is crucial for these applications to adhere to Pakistan’s regulations. Therefore, users should verify that the apps they are using are officially registered and compliant with regulatory standards.

It’s important to note that some of these apps may request extensive access to the user’s device, raising privacy concerns and making users susceptible to exploitation. Users must carefully review the terms and conditions before proceeding.

When applying for a loan through these apps, users are required to provide personal information and agree to terms and conditions. These terms specify the loan duration, deductions, disbursement amount, repayment methods, and additional fees. However, discrepancies between the advertised terms and the actual terms often lead to deceptive practices or fraud.

During the application process, users are asked to provide two emergency contact details as collateral. In some cases, recovery agents have engaged in fraudulent practices or harassment to collect payments from borrowers and their contacts.

To avoid potential fraud, users should be cautious and make payments only to the verified accounts of mobile app-based micro-credit and nano-loan services. It’s crucial to stay informed and vigilant when using these apps.

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CCP advises the public, especially lower to middle-income consumers who are the most vulnerable, to exercise caution and conduct thorough research before using these services.

Image Source: fizkes / Shutterstock

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