With the growing number of finance and loan-related apps these days, so has there been an increase in scams that common people fall prey to.
The world is growing increasingly digital and there are a lot of digital apps these days that lure people in with hefty promises of loans at very low premiums, insurance, finance and investment-related apps that claim to give good returns, crypto and more.
However, given the still unregulated and new system of this sector, it is also easy to scam people out of money and data that can then be used against them.
The founder of Zerodha recently also posted about some red flags that one should look out for with such finance or loan apps.
What Did Zerodha CEO Say?
Nithin Kamath, the founder of Zerodha, posted on X/Twitter cautioned people against digital lending apps and their predatory nature and how some of them are very insistent with users giving access to personal information that is not needed.
He wrote “Finance apps that ask for full access to contacts, messages, photos, etc. are a red flag, especially if it’s a loan app. A lot of these lending apps are digital avatars of predatory moneylenders (Sudakhor in Hindi).”
He further commented how “The number of people getting fleeced by shady and illegal loan apps has gone up significantly. Many individuals caught up in the web of these apps frequently resort to drastic actions, such as suicide. For every illegal loan app that’s banned, two new ones pop-up. It’s become a game of whack-a-mole.”
Finance apps that ask for full access to contacts, messages, photos, etc. are a red flag, especially if it's a loan app. A lot of these lending apps are digital avatars of predatory moneylenders (Sudakhor in Hindi).
The number of people getting fleeced by shady and illegal loan… pic.twitter.com/gtemoVqZif
— Nithin Kamath (@Nithin0dha) January 8, 2024
Read More: Learn How Chinese Loan Apps Are Scamming Indian Citizens By Exploiting India’s UPI Systems
Another red flag he pointed out that people often overlook is the ridiculous interest rates that these apps put on the loans taken writing “What makes these apps disgusting is the fact that many of them deduct as much as 10% upfront. Then there’s the fact that interest rates range from 50% to 100%, or even 200%+.
It’s impossible for people who borrow on these apps to repay with such usurious terms. But considering people who borrow on these apps are desperate, they don’t notice the fine print.”
He also compared how in the past loan sharks would use physical threats, however, these apps also have ways to threaten people if they don’t get their money properly.
Kamath posted “Traditional loan sharks resort to physical threats to recover money. These loan apps harass people by calling all their contacts and sharing private photos and lewd pictures that are morphed.”
Several people in the comments agreed with Kamath’s post writing about how these apps are traps that one should be cautious of.
One user wrote “Taking loans from these fraud apps is the biggest mistake one can make. The government seriously should do something here, there should be some reporting platform where people can submit details and then after the government takes charge.”
Another said “As these lending apps often operate across borders, international collaboration is essential for effective regulation and enforcement. Cooperation between countries can help curb the global reach of predatory lending practices.”
Image Credits: Google Images
Sources: The Economic Times, Livemint, Moneycontrol
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This post is tagged under: Zerodha, Nithin Kamath, loan sharks, loan apps, finance apps, illegal loan apps, digital lending apps, Nithin Kamath Zerodha, finance, digital apps, scam, finance scam, finance scam india
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