ONLINE LOAN APPS AND HOW TO FILE A COMPLAINT ABOUT THEM

 

Online Loan Apps and How to File a Complaint About Them

What are online loan apps?

There are many online loan apps on social media that provide small loans to people. These digital loan companies are present on different social media platforms with different names and most of them provide loans between Rs. 10,000 to 50,000 thousand. To provide quick, easy, and timely loans to the aspirants in one to two days, these companies run advertisements on social media especially Facebook in Pakistan.

These online loan apps are among the most downloaded apps from the Google Play Store in Pakistan.

Regarding digital loan apps in Pakistan, the Securities and Exchange Commission of Pakistan (SECP), a government body, told BBC News through its written statement that some digital loan apps are linked to non-banking companies and are regulated by SECP and where SECP issues license in this regard or licensed by State Bank of Pakistan however, many such apps are operating without a license which is illegal as lending is a licensed practice and Pakistani law prohibits private lending.

How do online loan apps trap people?

A recovery agent at Online App has spoken to BBC News about Online Loan Apps and how borrowers are defrauded by the company. Stating that when someone applies for a loan on an online app, first of all, they are not provided with correct information by the company. The loan amount and payment details given in the app are only fraudulent.

Whether the loan is small or large, the company asks borrowers to repay the loan after seven days, while the app says ninety days, he says. When someone applies for a loan, he thinks that he has to repay the loan in ninety days, but after receiving the loan, he finds out that it is due seven days later. In such a case, if the borrower calls the helpline of company, it is always busy and the customer is not given any response.

He said that if the lenders are unable to repay the money, they are charged as extension money and an extension of 7 to 10 days is given to repay the loan. If a person fails to pay the debt, he is threatened and even his relatives are told to put pressure on him.

The agent said that he feels sorry for many people but the company management does not make any concessions in this regard.

The biggest problem, he says, is that these small borrowers take loans in an emergency and apply for loans quickly, most of them don't even bother to read the terms and conditions or cannot read at all.

What is the reason for the increase in complaints about digital loan apps?

A financial expert told the BBC that in the normal banking system, the State Bank has very strict supervision.

"Consumer financing is a regulated business worldwide to protect the interests of consumers." He said that digital lending apps are working all over the world but there is no transparency in this matter in Pakistan.

Their working methods should be monitored as they intimidate the borrowers and also harass the family members of the borrowers.

These small loans are often taken by poor people who urgently need money and are illiterate. Often these apps advertise interest-free loans and people fall prey to their scams. When they are harassed by the company to pay the loan, they don't know which forum they can file a complaint against.

As State Bank issued a policy in 2009 that banks will not intimidate and harass borrowers. However, SECP does not have enough capacity to implement it.

In this regard, the SECP statement said that borrowers are repeatedly asked to read all the conditions carefully before taking a loan, including interest on the loan, service charges, and late repayment of the loan. Charges, including other fines, etc.

SECP is also considering introducing additional regulations in this regard to encourage better behavior toward borrowers.

Where to complain about these apps if needed.

The SECP said in this regard that it is monitoring digital lending and borrowing and also looking at the underlying risk associated with it so as to provide protection to borrowers and consumers through necessary regulatory intervention.

On the issue of intimidation by the companies to the borrowers, the SECP said that the borrowers should be properly informed about all the terms and conditions of providing loans, and in case of any complaint, they should contact the concerned company, if no response or the company fails to resolve the complaint then you people should contact the following number or email.

Securities and Exchange Commission of Pakistan (SECP)

Toll-free number 080088008

Or register your complaint at https://sdms.secp.gov.pk/