The general public has been warned and advised by the Competition Commission of Pakistan (CCP) against the growing popularity of mobile app-based micro-credit and nano-loan facilities.
These programs, which are available on Google, PlayStore and app store, provide short-term financing to borrowers, but their track-and-trace mechanism is now challenged by several complaints.
The CCP has opened an investigation into these applications because it has come to light that the organisations responsible for them frequently alter their locations and/or their businesses. The CCP believes it is important to inform the public of the numerous issues seen and how to prevent them up until the investigation is finished. CCP has also informed SECP, FIA, and PTA about this.
The majority of these programmes run without following Pakistan’s legal regulations. Because of this, it’s crucial to confirm that the applications that customers are borrowing from are legitimately registered and compliant with applicable regulations.
Furthermore, by requesting that the user accept the app’s usual access permissions, these programmes may tend to completely take over the user’s device. The user may be exposed to the owner of such programmes as well as have their privacy compromised. Users are advised to thoroughly study the terms and conditions stated to make an informed choice.
Users of these mobile app-based micro-credit and nano-loan facilities are presented with a variety of terms and conditions that specify the length of time for which the loan is given, the precise amount of loan issued, deductions made from the total loan requested, payment and repayment options, and any hidden charges.
Yet, it has been noted that these terms and conditions frequently differ from what is claimed, leading to deception or fraud.
Additionally, the applications ask the user to enter the names of two or more emergency contacts that the operators will utilize as credit or guarantors. Recovery agents have reportedly been observed harassing and abusing debtors and their contacts to collect payments.
The general public is informed that these lenders will contact the consumer and the emergency contacts to recover the debt when it is due.
The general public has to be aware that recovery agents have occasionally provided their personal account information rather than the legitimate account of the lender to prevent falling victim to fraudulent activity.
Because of this, payments might not be taken from the payment, which would be unpleasant for borrowers. Paying for micro-credit and nano-loan services through mobile apps requires caution from customers, who should only use their registered accounts.
When using mobile apps for micro-credit and nano-loan facilities, CCP strongly recommends the public use caution and due diligence. These programmes have been downloaded by the general public, including the most vulnerable consumers from the lower to middle-income classes, well over 10 million times, according to the preliminary data.