A middle-class working professional urgently needs funds to meet an emergency. His attention is drawn to a message he receives that promises a loan in eight hours without any paperwork. The message has a link to download an app to avail the offer. He clicks on the link, downloads the app, and applies for a loan over it.
As promised, he gets the loan in no time. He is thrilled. However, his joy is short-lived as he receives a call within a week asking him to repay the loan in ten days with excessive interest. The representatives of the loan provider threaten that they will make public his sensitive pics if he fails to do so.
Sounds familiar, doesn’t it?
The gentleman in our above example is a victim of a digital lending scam. Illegal entities promise you instant loans through digital lending apps. Often, they lure you with seemingly fantastic offers. To avail the offer, you are asked to download the app. When you download the app and give it various permissions, you unknowingly provide the scammer access to sensitive info stored on your phone, including contacts, pictures, passwords, and even financial details. Using that information, these fake entities either extort money from you or steal it from your bank accounts.
Hence, we list a few ways in which you can practice safe digital borrowing and avoid the trap of fake lenders:
Choose an RBI-Registered Lender
Only RBI-registered NBFCs like DMI Finance and banks are authorised to provide loans in India. Find out whether the lender is registered with RBI as a loan provider. Insist on checking their RBI registration number before clicking ‘Install’. Visit the loan provider’s website to verify its authenticity and background. Cross-check the same by visiting the RBI website.
Check Before You Click
Some of us may have gotten messages like, “You are eligible for a loan amount of Rs.1,00,000 instantly. Please click on the link to redeem the offer”. Alternatively, you are provided with a number and encouraged to call. Avoid clicking on the links or calling numbers received over unwanted messages.
Before installing an app from an address link received over a mail or a message, double-check the link. Often, fraudsters mask the link address by changing a few characters in the link address and fraudulently direct you toward a fake portal.
Do your due diligence to find out that the numbers and links are genuine.
Be Wary of Pushy Lenders
Pushy lenders are a red flag. When a lender tries to hard sell a loan by mentioning an urgent offer expiry deadline or mentions a ‘limited period special offer’, chances are that there may be something fishy.
App Permissions
While downloading, the app will ask you for various permissions. Rather than giving blanket permissions, verify whether the app needs to be given access to sensitive information, such as pictures, contact info, passwords, bank account details, etc. If you feel that a particular permission may not be needed, opt out from installing the app.
Beware of Loan Disbursement Before Loan Agreement
If the lending app is insisting on crediting the loan amount before completing the loan formalities, etc., there are chances that it is a fraud. A genuine lender will always verify your repayment capabilities before disbursing the loan. If the loan provider is not doing it, then its intentions are doubtful. Always insist on signing a loan agreement before applying for a loan. Ensure that the agreement discloses material details, including the name of the actual lender, processing fees, annualised interest rate, penalty, repayment schedule, etc.
Demands for Payment of a Processing Fee Upfront
If the loan provider is demanding a processing fee upfront, it may be another red flag that it’s an unreliable operator. The processing fee should either be deducted from the disbursement amount or at the very least demanded only at the time of disbursement.
However, despite your best intentions and precautionary measures, if you fall victim to loan fraud, don’t panic. Follow these tips to minimise the extent of your loss.
– Maintain comprehensive records of every transaction, including EMI payment receipts. If you find that the lender is applying some kind of pressure, immediately report it to the cybercrime cell or nearest police station and pursue legal action.
– To report cybercrimes and stop financial loss caused by fraud loan app scams, dial 1930. It is a Helpline number operationalised by the Ministry of Home Affairs to expedite the lodging of cyber-crime cases. You may also visit https://www.cybercrime.gov.in/ for more information.
– Immediately uninstall the application from your mobile phone.
– While you may not see any immediate fallout after coming in contact with a fake loan app, keep an eye out for any unusual or unauthorised activity.
– Contact your bank to stop any fraudulent transactions. Usually, a bank will compensate the loss to a customer due to fraud if reported within 10 days of the incident. However, you must report the loss within a period of 72 hours of noticing it.
– If you feel that sensitive information has been compromised, block your current account, and card and transfer your funds to a new account.
Conclusion
While applying for a loan with any lender, if you find anything fishy immediately step back and report them.
Check out the DMI Cyber security blog on https://www.dmifinance.in/blog.html for more information on the different types of digital lending scams, how to keep data protected, safe online practices, etc. You can also stay connected with us on Facebook, LinkedIn, Twitter, and YouTube for more information on cyber fraud.
At DMI Finance, we believe in complete transparency and ensure a safe and secure customer experience. We do not send out any messages or emails asking customers to share personal information with our representatives or pay them money to avail services. Contact us at 080-64807777 for any doubts or queries regarding our services.
