When Raj took out a $110 loan last March, he thought he’d solve his financial problems quickly. But it wasn’t.

The man, who lives in Pune in the Indian state of Maharashtra, is one of hundreds of victims of internet loan scams that are growing in the country.

Like many people, Raj (not his real name) was impressed with the speed and ease of loan approval – all he had to do was download an app on his phone and provide a copy of his ID card.

He even took some money, but only half of the requested amount. And three days later, the alleged company began demanding that he pay three times the amount borrowed.

The man then decided to use other apps to pay off his debt, which increased his debt exponentially. At one point, Raj owed more than $6,000 in 33 different apps.

The scammers even threatened him, demanding payment. Raj claims he didn’t go to the police out of fear.

Through the apps, the hackers were able to access all the contacts and photos stored on the phone and threatened to send the nude photos of his wife to all the numbers stored on his cell phone if he didn’t pay what they wanted.

The man then decides to sell all of his wife’s jewelry to pay the criminals – and he says he’s still scared.

“I don’t think they will leave me alone. I fear for my life. I get threatening phone calls and texts every day,” she says.

This type of scam has become widespread in India. Between January 2020 and March 2021 alone, a study by the Reserve Bank of India (RBI) – the country’s Central Bank – identified 600 different applications for illegal loans.

The western state of Maharashtra recorded the largest number of complaints regarding loan practices: 572 complaints were reported to the RBI.

“These apps promise hassle-free loans, fast cash, and people are lured before they realize their phones have been hacked, their data stolen, and their privacy compromised,” says Yashasvi Yadav, Police Special Inspector in the Cybercrime Department. . from Maharashtra.

I believe the scam is spreading because many people in India are not eligible to get loans in the traditional banking system.
yashasvi Yadav from Indian Police

The inspector says that although the scammers are in India, most of the apps run on servers in China. Yadav added that some criminals were identified by the police by monitoring their bank accounts and phone numbers.

But one scammer the BBC report spoke to said it was relatively simple to avoid detection by authorities.

“It’s very difficult to track down app developers or people like us who work for them. We all use fake documents to get a cell phone number.”

“We operate all over India. Most of us don’t have a fixed place to work. All I need is a laptop and a phone connection. There are more than ten different numbers that someone like me can use to threaten a customer.”

This particular scammer said his “employees” were trained to find “naive and needy” people who were paid only half of the amount requested in financing. As in Raj’s case, the scammer will demand payment of three times the amount sent. If the victim does not pay, the pressure on them quickly increases.

“The first step is to get angry. Then to threaten. And then, with our access to phone data, the blackmail game begins,” he says. “Many of them do not go to the authorities out of shame and fear.”

The BBC had access to some of the messages sent to the victims. Some threaten to tell family and co-workers about debts, others involve deep fraudulent threats – making and distributing pornographic videos using the image of the victim’s face.

The government tried to stem the crime wave by asking Google to scan apps available in the app store in May of last year.

Almost all smartphones in India run on the company’s operating system Android. But even after it was removed from the platform, the scammers continued to claim victims, this time using text messages to advertise the apps.

After the publication of its study, the Reserve Bank of India asked the government to make new recommendations to try to contain scams involving online lending. The business was willing to use some of its framework to validate applications. The government is expected to respond in the coming weeks.

But for some, the new rules will come too late. According to his family, Sandeep Korgaonkar committed suicide on May 4 due to threats and harassment faced by the scammers behind his loan apps. According to his brother Dattatreya, Sandeep didn’t even ask for credits, he had just downloaded the app.

Criminals began calling his co-workers and manipulating photos of Sandeep, saying he had huge debts, to create fake nude photos – these were forwarded to 50 people.

“Despite filing a police report, the harassment did not stop,” says Dattatreya. “Her life became hell, she couldn’t sleep and she couldn’t eat.” Indian police are investigating the case.