Financial Phishing Foiled: Social Media Takes Aim at Fake Loan Apps

The prevalence of fraudulent advertising on social media sites is not new. Recently, fraudsters have used social media to spread bogus loan application adverts. However, there may be some hope for Indian users who discover such fraudulent loan appst.

Indian government is implementing measures to prevent the circulation of fake loan apps

"We will amend the existing Information Technology Rules to prohibit intermediaries from hosting advertisements for fake loan apps," stated Rajeev Chandrasekhar, Minister of State for Electronics and IT in the Government of India. This is a significant problem for the central government since false advertising spreads over the internet, particularly on social media platforms such as Facebook, Instagram, etc. 

According to research, scammers can pay to advertise on various sites but remove them if discovered. As a result, if platforms continue to allow such advertising to be displayed on their platforms, they will lose their "legal immunity."

The Problem

"Additionally, Rajeev Chandrasekhar stated that the Ministry of Information Technology has been in conversation with the Reserve Bank of India for several months. However, it was only recently that significant attempts were made to address and minimise this problem. How Do These Advertisements Work? It is well known that fraudsters generally lure unwary victims onto their platforms by employing appealing (and false) adverts. 

These advertisements primarily target loan applications, frequently promise false interest rates and present a misleading narrative. However, the crux of the problem arises when victims borrow money from these applications based on the promise of low-interest rates, only to be told of concealed fees and interest rates after approval. Furthermore, these applications may access sensitive user data, such as messages and contacts, which can be used for fraudulent behaviour and spamming.

Fake loan application market is estimated at around $700–800 million

Furthermore, those who become engaged in this problem frequently commit suicide. RBI Updates 'White List 'Currently, victims of such deceit report that the lack of regulatory requirements leads to internet platforms failing to undertake adequate due diligence, allowing frauds undetected. Furthermore, in the past, the Reserve Bank of India (RBI) lacked a clear list separating genuine from fraudulent loan applications. However, a list has been shared with the national government.