The Pakistani Competition Commission of Pakistan (CCP) has taken note of the several new issues raised by mobile apps on the Google Play Store that provide nano-loans to unwary users.
According to an initial investigation
These mobile applications on the Google Play Store were providing nano-loans without adhering to the regulations set forth by the Non-Banking Micro Finance Companies (NBMFC) law.
While the majority of these applications only offer loans smaller than Rs. 10,000, the NBMFC law provides a framework to govern nano-loans above this amount. These applications have far over 10 million downloads, according to the first statistics.
The research showed that these mobile applications had discrepancies between the quoted interest rates and the processing expenses paid by the borrower. Additionally, there are instances of inaccurate assurances of data security and privacy, the gathering of personal information under the guise of providing loans, an inconsistency in repayments, and the stated and provided credit ranges.
To look into potential violations by these mobile applications of Section 10 of the Competition Act of 2010, CCP is the first regulatory agency that formally launched an investigation into the situation in September 2022. Based on the results, a committee was established to conduct a thorough investigation and submit a report to the Commission regarding any potential Act violations involving all mobile applications for nano loans.
The inquiry committee has been diligently working on the case, consulting all necessary parties, and gathering data to make an informed decision.
Meetings with the Federal Investigation Agency (FIA), the Pakistan Telecommunication Authority (PTA), and the Securities & Exchange Commission of Pakistan (SECP) were also held in this respect (FIA).
The Commission’s objective in this investigation is to guarantee that there are enough disclosures and truth in marketing so that consumers have the option to make an informed decision.
It also focuses on the prohibition of deceptive marketing of these nano-loans to vulnerable customers.
Finding the owners of these applications has proven to be difficult because the majority of them have been shown to operate from fictitious addresses and contact information.
It is also encouraged for everyone or anything with knowledge of these nano-loan apps to share that knowledge. The Commission will be presented with the investigation’s findings for consideration and potential action.
According to the Competition Act, CCP is required to guarantee open competition in all areas of business and economic activity, to improve economic effectiveness, and to safeguard consumers from anti-competitive behavior such as misleading marketing techniques.