Lending Scams: Smart tips to avoid illegal digital lenders | The Financial Express

Lending Scams: Smart tips to avoid illegal digital lenders

Given the burgeoning cases of financial fraud, exercising caution in borrowing via loan apps is highly advised. Here are a few ways you can be careful when borrowing digitally.

Lending Scams: Smart tips to avoid illegal digital lenders
Borrowing credit is a financial liability and must be done with caution.

Instances of digital fraud are on the rise, often involving the same culprit – loan apps. Over the last two years, countless people across India have fallen victim to varying degrees of harassment at the hands of such apps.

There are several loan apps currently operating in India, which extend small loans to borrowers via mobile-based applications. However, many of these apps are unregistered and unauthorised entities operating illegally. The typical modus operandi of such apps is extending credit to needy customers whom recovery agents then harass via calls. Upon download, these loan apps often request permission to access personal and financial data stored on the customer’s mobile phone, which is then misused to harass them.

Murari Sridharan, CTO, BankBazaar.com, says, “Cyber financial fraud continues to rise, with new scams being reported frequently. By exercising caution and following advised safety practices when transacting online, borrowers can effectively lower their chances of becoming a victim to financial fraud.”

Given the burgeoning cases of financial fraud, exercising caution in borrowing via loan apps is highly advised. Here are a few ways you can be careful when borrowing digitally:

Choose an RBI-registered lender

An important part of the borrowing process is to know your lender. When exploring your options, choose a bank or non-banking financial company (NBFC) registered with the RBI. The RBI’s website lists the names of banks and NBFCs registered with it. This will help you ascertain whether or not the lender you have chosen is regulated by law, reducing the risk of you going with an unauthorised lender. Nearly all financial institutions registered with the RBI have official websites or mobile applications offering an array of loan services. Using an RBI-registered lender’s app or website is advisable to fulfil your borrowing needs.

Don’t entertain unsolicited links, messages

With rising credit needs, unauthorised loan apps have mushroomed over time, often offering quick credit with or without documentation. Chances are you may have received unsolicited links or messages from such apps yourself. The key to being safe here is to ignore and delete such communication, regardless of how lucrative it may be. By interacting with such links, you risk compromising your sensitive data, which may be subject to misuse.

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Be wary of pushy lenders

Borrowing credit is a financial liability and must be done with caution. When enquiring for a loan, be wary of callers asking for your bank details, such as your card expiry details, PIN, OTP, or banking passwords. Also, steer clear of lenders who may be chasing you with a loan offer. It is worth remembering that banks and financial institutions do not contact customers enquiring about sensitive financial details. If you face such an instance with a lender, it is advisable to seek another lender.

Use strong passwords

Using strong passwords for your bank and online accounts is an effective way to shield yourself from such risks. Follow best practices to create strong passwords and change them regularly. Use updated anti-virus software on your mobile and PC.

Adhil Shetty, chief executive officer, Bank Bazaar.com, suggests, “There are a few things you can do to ensure that you don’t fall prey to unauthorised apps. First, avoid downloading unauthorised applications and use only registered and recognised apps for banking transactions. Second, avoid accessing or clicking on unknown links sent to you via SMS or any other messaging platform. Third, create strong passwords for your mobile device and social media accounts. If you receive a suspicious link or message, report it to the cyber crime department.”

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Loan trap

* Use an RBI-registered lender’s app or website for fulfilling your borrowing needs

* Create strong passwords for your PC, mobile device and social media accounts

* Steer clear of lenders chasing you with lucrative loan offers. Don’t click on unsolicited messages or links from loan apps

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