Government takes decisive action against illegal loan apps

Blocks 43 applications, launches awareness campaign to protect consumers

KARACHI:

In a bold move to tackle the proliferation of illegal loan applications and safeguard consumers from fraudulent practices, the Federal Minister for Information Technology (MoIT) has launched a comprehensive crackdown, instructing the Pakistan Telecommunication Authority (PTA) and the Securities and Exchange Commission of Pakistan (SECP) to take swift and stringent action against unregistered and deceitful loan companies. Additionally, the government will be initiating an awareness campaign to educate and empower individuals.

Federal Minister for Information Technology, Syed Aminul Haq, stated in a media communication that the government is taking rigorous measures to combat illegal loan applications after receiving numerous consumer complaints of harassment. To address the issue, PTA Chairman, Major General Hafiz Rehman, has been directed to take prompt action.

Speaking to the Express Tribune, the minister’s communication manager said, the PTA has already acted upon the minister’s directives and has successfully blocked 43 applications to-date. Haq emphasised that these companies are registered with the SECP, and the PTA’s actions involve close collaboration and consultation with the financial regulatory authority.

Expressing concern over the activities of lending mafias on social media platforms, particularly Facebook, the government aims to launch a comprehensive awareness campaign to educate consumers on protecting themselves against such malicious tactics.

Industry expert Nasheed Malik of Topline Securities explained that this issue is primarily centred around fraudulent activity rather than digital privacy concerns. These loan applications are not properly registered with the government, and most of them lack approval from the State Bank of Pakistan (SBP), hindering swift action by the authorities, he said.

These unregistered entities deceptively collect personal information from unsuspecting individuals, making the situation more challenging, added Malik.

To combat the issue effectively, the minister encouraged individuals to report suspicious loan applications to the PTA, FIA Cyber Crime Wing, or local police. He also urged the FIA Cyber Crime Wing to proactively take action against such entities rather than relying solely on consumer complaints. Highlighting the importance of addressing this matter, Haq underscored the need to suppress those who exploit vulnerable individuals and push them into financial ruin. The use of personal data, threats, blackmail, and usurious practices are all illegal and must be curbed. Meanwhile, ICT expert Parvez Iftikhar stressed the necessity of a Personal Data Protection law to ensure digital privacy. The draft bill of the law is currently awaiting completion of its open consultation process before being presented to the parliament for legislation.

The minister also cautioned consumers to exercise caution and avoid sharing personal data without careful consideration, especially in response to online and social media advertisements. He warned against falling prey to false promises of earning online money and advised individuals not to disclose any financial information or provide upfront payments.

Additional details reveal that the crackdown on illegal loan applications was initiated in response to numerous consumer complaints of harassment. Authorities have pointed out more than a dozen such fraudulent applications that are not registered on Google Play store, making tracing them more challenging. However, the authorities are confident in catching the criminals.

“It is just a matter of time,” he said.

Consumers are strongly advised to exercise caution when applying for loans online and engage only with reputable and legitimate companies, urged the minister.

Published in The Express Tribune, July 18^th, 2023.

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