10 Ways To Protect Yourself From Illegal Digital Lending Apps

With the rise of digital fraud, borrowers often fall victim to predatory lending practices. The non-availability of funds at desirable terms, too-good-to-be-true offers and lack of general awareness of finance and borrowing are majorly responsible for the entrapment of unsuspecting consumers.

Fraudulent Digital Lending Apps have sprung up in great numbers in recent times, and one of the most vulnerable groups affected is the low-income segment. Many individuals in this category lack awareness about the risks associated with illegal digital lending apps.

Illegal lending apps often use enticing tactics to lure investors, promising short-term loans at very low-interest rates. These attractive offers can deceive borrowers, drawing them into a web of financial difficulties. Borrowers are then caught in vicious debt cycles, owing to hidden charges, high-interest rates and even fraudulent transactions, leaving them with less than what they already had.

So, how can you identify these problematic apps?

Identifying these apps becomes easier when you watch out for these telltale signs:

Lack of Regulatory Approvals: Legitimate lending apps prominently display regulatory approvals and licenses. These approvals and licenses provide borrowers with confidence that the lending app is operating within legal boundaries and adhering to industry standards.

High and Unclear Costs: Be cautious of apps with excessive interest rates and unclear terms and conditions. If the rates seem too good to be true, they probably aren't legal.

Unsolicited links: Usually, malicious links sent via SMS or email will lead you to these programs, as they are not listed in app stores.

Privacy Intrusions: Apps requesting unnecessary permissions to access personal data should raise concerns. Legal lenders only ask for necessary information and permissions to process your loan. These apps often lack a responsive mechanism, including customer service numbers or a valid registered office address. While illegal apps present risks, there are legitimate, well-organized sources of digital lending available. Here's how you can identify them:

Check Reviews and Feedback: Investigate the app's reputation by reading customer reviews and feedback online on aggregator sites or Google searches. Positive experiences from other borrowers are a good sign.

Financial Literacy: Enhance your financial literacy to understand better the risks and costs associated with borrowing. Knowledgeable borrowers are less likely to fall into traps.

Read the Fine Print: Carefully read and understand the app's terms and conditions. Legitimate lending apps provide clear, concise terms.

Contact Information: Ensure the app provides reliable customer support with clear contact information, including a physical address. Genuine lenders value customer communication.

Comparison: To verify the legitimacy of these apps, users can also compare them to other legal apps.

Antivirus Software: Using reliable antivirus software and anti-malware software on your device to detect and prevent the installation of potentially harmful apps is important

Safeguarding yourself from illegal digital lending apps is crucial, especially if you are part of a vulnerable low-income group. Being cognizant of the risks, recognizing the red flags, and seeking organized lending sources can help you avoid financial pitfalls and ensure your borrowing experience is safe and responsible. Remember, knowledge and informed decision-making are your most powerful tools against predatory lending practices in the digital age.

The author is the MD and CEO of Aadhar Housing Finance.