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The dangerous extortion racket run by instant loan apps and their link to China

In February this year, two Chinese nationals, along with 115 Nepali nationals, were arrested for their involvement in running an online fraud loan scheme that targeted Indians.

mobile appsAccording to officers of the Chandigarh Cyber Cell, this trend of giving instant loans and extorting money gained momentum during the pandemic. (File photo, representational)

The arrest of a Chinese national, Wan Chenghua (32), by the Chandigarh Police on Monday (September 12) along with 20 others for allegedly blackmailing and extorting money from people through instant loan mobile applications has raised several concerns. According to officials of the Chandigarh Cyber Cell, the racket of luring people to take instant loans via mobile apps and then extorting money from them gained momentum during the Covid-19 pandemic.

How do instant loan mobile apps work?

These mobile applications provide small amounts in instant loans at a higher interest rate, ranging from 15 per cent to 20 per cent. These applications do not follow the strict procedures followed by banks before giving out loans, such as customer verification.

A person who installs the application and wants a loan has to fill out an online form. To get the loan, the mobile user has to allow the application to access the contacts, photos, videos and all other digital content of the mobile phone. Many mobile applications provide the loan amount after deducting the interest from the principal amount. Some of the applications even recover the interest on a daily or weekly basis.

Are these apps illegal?

Gurcharan Singh, cyber faculty head of the Central Detective Training School (CDTS) in Chandigarh, said, “As many as 90 per cent of these mobile applications are illegal. The Reserve Bank of India has no control over these. These applications are a way of extorting money. The app handlers, operating through call centres, access the digital content of borrowers. When the borrowers fail to pay back the money due to the high interest rate, the handlers morph their pictures and circulate these morphed images to all the phone contacts of the person, thus defaming him”.

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He said while these apps are often set up by Chinese firms, the callers used to trap borrowers are often Indians.

When did this trend start and how many such cases have been reported in Chandigarh?

According to officers of the Chandigarh Cyber Cell, this trend of giving instant loans and extorting money gained momentum during the pandemic and continued after that. In Chandigarh alone, more than 150 complaints of extortion and blackmailing via instant loan mobile apps have been filed.

In February this year, two Chinese nationals, along with 115 Nepali nationals, were arrested in Nepal for their involvement in running an online fraud loan scheme that targeted Indians.

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Who is Chinese national Wan Chenguha, arrested by Chandigarh Police?

Wan Chenguha arrived in India in 2019 on a work visa. He has been staying in different locations in Delhi and Noida despite his work visa expiring in 2021, said Superintendent of Police, Chandigarh Cyber Cell, Ketan Bansal. Those arrested along with him include Parvaj Alam alias ‘Jeetu Bhadana’ of Jharkhand, who was operating at least five instant money-lending applications, said police.

First published on: 13-09-2022 at 06:20:27 pm
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