BASIC MEDIA editing and computer skills, a ‘clean’ phone, some determination and Rs 300 — that is all it takes to turn the tables and scam predatory lending apps.
Using fake documents and phone data, people who have been borrowing small sums from instant loan apps have found a way to dodge the usurious interest rates and continuous mental harassment that borrowers usually face at the hands of dubious digital lenders.
Over the last four months, The Indian Express spoke with a range of stakeholders including borrowers, fintech intermediaries, government functionaries, big tech companies and former RBI officials that pointed towards how, in the absence of any government and regulatory norms, online platforms such as Meta, Google, Apple’s App Store and WhatsApp carry out little due diligence and let fraudsters openly advertise predatory loan apps.
With a little help from artificial intelligence, fake data
In Part 2 of this series, The Indian Express details how an entire online ecosystem has mushroomed to take on loans issued by fraudulent apps. An investigation has revealed that for a mere Rs 300, unscrupulous borrowers use ‘information packs’ – forged government-issued ID cards, text message folder, contact list and a photo gallery full of images generated with the help of artificial intelligence (AI) – that are sold on messaging app Telegram.
All that the borrower needs then to pull off a successful con on the app is an empty phone to load the forged documents (Aadhaar and PAN cards) and information packs (fake text message folder, contact list and photo gallery) to create a fake digital trail. The fake digital history looks convincing enough for a loan app to then issue the money — typically between Rs 5,000 and Rs 20,000 for a week. The harassment to repay the loan usually starts around the fifth day.
Speaking to The Indian Express, a person involved with a groups that sells fake information packs to create fraudulent digital trails said, “All that this job requires is minimal editing skills on platforms like Photoshop and entry-level computer knowledge to create a database of contacts on an Excel sheet and convert it into the vCard (a Virtual Contact File) format so that Android phones can read them.”
One such group on Telegram, named ‘Instant Loan Apps,’ has over 9,000 subscribers. “For those of you who did not know!! What is this channel for? Answer: You will get Bank SMS transaction data and call logs and contacts … with the help of this you will get approval in 7 days loan apps,” read a recent message on the group.
In another Telegram group, named ‘Fake loan apps’, the directions were fairly simple: “do not use your primary phone… buy a clean phone… and install all the data we are sharing”.
How loan apps target, harass borrowers
Fraudulent loan apps usually target borrowers by leveraging the personal data they collect from their phones. Besides loan apps requesting access to a borrower’s contact list, text messages, call logs and photo gallery, they also require a user to upload photos of their Aadhaar and PAN cards.
Once a person gives necessary permissions and submits government-issued IDs, they are subjected to abuse and harassment during the recovery process. Fraudsters usually leverage two key details from the Aadhaar card — father’s name and address — while harassing a borrower for loan repayment.
A person involved with a Telegram group said, “Due to their very nature, most fraud loan apps don’t have a way to ping the Aadhaar registry to check whether the ID provided by a user is authentic.”
The person added that recovery agents either extract the photo on the submitted Aadhaar Card or use the ID to shame the person publicly.
The person said, “By submitting a fake Aadhaar Card that may have your name but an incorrect number and address, (you) can go a long way in ensuring that the fraudsters behind loan apps don’t harass you.”
Explaining how the fake information packet helps fool a loan app, they said the fake text message data is compiled to mimic the texts a typical user’s phone would contain like bank transactions and promotional messages from various companies.
“Loan apps look at such messages as a check to ensure that a person is constantly transacting or receiving money — a sign of an active bank account,” the person from the Telegram group said.
While fake call logs ensure that a person’s phone number seems active, the fake contact list protects one’s real contacts who could be hounded by recovery agents later.
The person from the Telegram group said that access to a borrower’s contact list serves a dual purpose for a fraud loan app. First, it allows recovery agents to reach out to a borrower’s contacts with abusive messages when the borrower defaults on the loan. Second, every contact in a borrower’s phone is a database of potential borrowers. Fraudsters send messages to a person’s contact, luring them with promotional offers that are too good to be true, in the hope that some of them will fall into their trap.
There is collateral damage too. People who create fake call logs and contact lists usually purchase contact data in bulk. While several entries in such databases are non-working numbers, there are active numbers too.
“Recovery agents may send harassing messages to people using active numbers, thinking they are related to the borrower,” the person from the Telegram group said.
Since loan apps are aware of these steps being used to swindle them, they may reject a person’s loan application on the slightest suspicion of fake documents being used. And this is where “hunters” come in.
These are people who “hunt” for apps that offer loans based on fake documents and data. The “hunters” then keep sharing information on such apps on their Telegram groups so that people can apply for loans using forged data.
Talking about user safety while using an instant loan app, Sugandh Saxena, CEO, Fintech Association for Consumer Empowerment (FACE), said, “Be mindful of the privacy permissions you grant to a loan app. If a loan app seeks access to your photo gallery and contacts list, do not install it.”