After the outbreak of the Covid-19 pandemic, many people had to face job losses or salary cuts as businesses dealt with severe blows. Transitioning to a lower pay scale overnight is almost impossible and dreadful. Many people have turned to borrow as a way out to meet the most basic requirements.
To make ends meet, millions of Indians are downloading fast borrowing apps. Cybercriminals are taking advantage of this by inventing new techniques to defraud mobile phone and computer users. With so many fintech companies ready to offer small loans, borrowers are likely to get confused and may fall into the trap of fraud lending apps offering instant credit online.
As these numbers continue to grow, awareness about how to identify genuine fintech lenders has become crucial.
Here are some pointers that will help you determine the legitimacy of the loan apps:
Check the credentials: A borrower should check the lender’s credentials and only work with an RBI-registered lender, whether it’s a bank or an NBFC. Ratings and reviews are important; when choosing a lender, it’s a good idea to look at the ratings and reviews. This will provide the borrower with a good sense of how the lender operates, and any unethical behaviour by the lender will be reported by previous borrowers.
Personal data access: Some lending apps require gallery and contact access to conduct underwriting and authenticity checks. Responsible lenders keep this information confidential and avoid disclosing it to third parties at all costs. In today’s environment, lenders have become highly capable in terms of underwriting systems and adhering to vetted collection processes. This eliminates their reliance on contact lists or gallery access, effectively putting an end to any fraudulent activity. Furthermore, responsible digital lenders keep their data secure by performing Information Security Audits and regularly monitoring AI functionality. Awareness is your best defence. Do your due diligence.
Lender’s website is not secured: When visiting a lender’s website, look for a padlock icon on any pages where you are asked to provide personal information. HTTP:// websites are secure because they are guarded against identity thieves who steal personal information and sell it to others. A reputable lender will protect you from loan scams by ensuring that your data is secure and will not leave your information accessible to others.
Physical address: The app/fintech from where you plan to borrow a loan should have a physical address. If you cannot find any legitimate physical address, you should avoid the loan. Many loan scammers prefer to remain anonymous in order to avoid legal repercussions.
Upfront fee: Many small lenders levy an upfront application fee or membership fee ranging from Rs. 100 to Rs. 400 on their apps. Once the borrower furnishes the fee they are redirected to other applications where they can apply. Because many of the smaller lending applications don’t have a website or aren’t even licensed, they work with other bigger lenders. Keep this in mind before zeroing in on the lender.
Google Play Store norms: Google Play Store doesn’t allow apps that offer loans with tenures below 60 days. Beware of small entities and protect yourself from fraudulent lending companies.
While lending apps can be a fantastic way to get a quick loan, protecting oneself from many fraudulent fintech loan apps is critical. It is also important in these times to be financially aware and digitally savvy in order to avoid illegal lenders and only borrow from RBI-registered sources.
by, Madhusudan Ekambaram, Co-Founder and CEO, KreditBee and Co-Founder of FACE