UPDATED on 25 June 2022 at 11.35am to include a comment from ZestMoney
We Indians have rushed to embrace rapid advances in technology without the early warm-up phase that allowed many in the developed world to recognise their virtues as well as risks. This is proving to be dangerous and expensive, especially for customers of banking and financial services. This week, I bring you a story of how mere curiosity turned a person browsing a product into a borrower who is stuck with a personal loan that he did not want; and how Instagram has become a fertile ground for fraudsters to cheat people with fake offers for luxury goods.
Personal Loan and BNPL Trap
Last year, Ratnesh had downloaded the ZestMoney app which gave him a credit limit of Rs20,000. Using this, he bought a TV and promptly paid all equated monthly instalments (EMIs). A few days ago, he wanted to check if his credit limit had increased, since he is a good borrower and had paid on time. This is when he saw an offer for a personal loan of Rs1.40 lakh.
Ratnesh did not want the loan but was curious about the interest charged on such loans, so he clicked on the banner. He then checked the EMI plans available when, without even asking for his consent, he was sanctioned a personal loan of Rs1.40 lakh by ZestMoney. He instantly tried to cancel and reverse the unwanted loan and was further shocked to receive a demand that he would have to pay a processing fee of Rs5,600 to cancel the loan or be saddled with a high interest rate. Fortunately for him, going public on social media ensured ZestMoney reached out to him and offered to waive the processing fee, provided he repays the entire amount.
Ratnesh says, "The government is working hard to ban Chinese apps from disbursing loans and harassing or blackmailing people, and here is ZestMoney looting customers. No doubt, I am capable. I can pay the Rs5,600 they are charging as a processing fee, but not everyone can."
Such dubious lending is not limited to apps only. Many e-commerce sites are offering customers a choice of 'buy now, pay later' (BNPL) or refunds on purchases made using certain digicards. It appears pretty easy and cool to buy things and then pay back gradually in EMIs. But be careful.
The interest component on such credit or loans (yes, these are loans given by lenders associated with the app and reflect on your credit report) is quite high. If you are not prompt in paying the EMIs, you may end up in a loan trap.
In an email response to this article, a spokesperson of ZestMoney says, "On 18th June, the customer got in touch with us saying he had unintentionally opted for the personal loan. He agreed to pre-close the loan and requested that the processing fee be refunded. The same was considered on a goodwill basis and refunded. It is unfortunate to note that our efforts to make the loan approval process frictionless did not meet the customer's expectations and we regret the experience."
Counterfeiters Selling Fake Luxury Goods on Instagram
Amazon as well as Cartier, the luxury jewellery brand, have filed lawsuits in the US against a social media influencer and eight other businesses for advertising, promoting and facilitating the sale of counterfeit luxury goods through Instagram and other websites.
The fraudsters had posted photos of Cartier bracelets, necklaces and rings on Instagram. At the same time, they registered as sellers on Amazon and other e-commerce portals and posted generic items for sale there. The fraudsters posted an Instagram link and told customers that if they buy a generic item available for sale on the e-commerce site, they would receive a high-quality Cartier product with it.
While the case has been filed in the US, such instances are not limited to that country. There are many fraudsters and sellers of counterfeit products operating on social media in India too.
They are especially active on Facebook and Instagram, offering expensive-looking products for a very low price. A buyer should be careful since these fabulous sounding offers may be for fake products or cheap rip-offs. There is also no guarantee that you will receive the same product shown on social media.
It is best not to buy goods based on social media posts without checking all details, especially comments and reviews from other buyers (this applies to e-commerce sites as well).
Stay Alert for Your Mobile Network
Swapping a mobile subscriber identity module (SIM) card is not easy for a common man. However, for a conman, it is not just easy; but he can cause havoc in the life of a subscriber. Sagar Singh Kalsi from Delhi discovered this the hard way.
When his mobile phone turned inactive all of a sudden, he visited the service-provider only to learn that a new SIM had been issued for his number. This was just the beginning and more shocks were in store for Sagar. On checking his bank account, he found a loan of Rs11 lakh of which he had no knowledge. There was also a transfer of Rs1 lakh from his account through internet banking. He filed a complaint with the Delhi police, who arrested three people after a month-long investigation.
The police probe revealed that the fraudster, Sunny Kumar Singh, worked in a reputed bank's credit card department and had access to customer records from where he collected information about accounts that have exciting and alluring offers such as instant loan, jumbo loan and smart EMI. Banks have certain offers available on mobile apps or the internet banking portal, based on the credit profile of customers. You can check it under offers after login into your bank account.
His accomplices, Pavin Ramesh and Rakesh, used to make fake IDs of these customers, substituting their own photographs with that of the customer. After obtaining a new SIM for the customer's number, Sunny changed the email IDs so that they remained totally in the dark about fraudulent transactions carried out in their accounts.
If you make it a habit to check your mobile network and emails regularly, you may be able to initiate action in time and recover your money.
KYC Update Fraud
Everyone, from the Reserve Bank of India (RBI) to banks, has been warning customers not to fall prey to know-your-customer (KYC) messages received from unknown numbers. Yet, people not only respond to such messages by opening the URL/link provided in such messages but also share the one-time passcode (OTP). One victim who did this lost Rs10 lakh from his bank account.
In this case, the Delhi police arrested three persons from Surat in Gujarat and Giridih in Jharkhand. After analysing the fraudster's mobile number and other information, police found money had been transferred towards the payment of some credit cards. Police then traced the name and address of the cardholder and arrested Pravesh Mishra and his accomplice Brijesh Kumar from Surat.
Further investigation revealed that 30% of the looted money was used in Gujarat, while the balance was transferred to Giridih using different modes. Police then conducted a raid in Giridih and arrested Kailash Kumar Mandal, the mastermind of this fraud.
Let me reiterate that nobody, including your bank, will ask you to update KYC from an unknown number, and you do not have to open any link in that message for this. Either block the number or report the caller to the nearest police station or file a complaint on the cybercrime portal of the ministry of home affairs (MHA). (National Cyber Crime Reporting Portal