Dozens held for using AI to coerce debtors

NCCIA seizes 40 laptops, 41 mobile phones in raid on illegal call centre

LAHORE:

The National Cyber Crime Investigation Agency (NCCIA) has arrested 39 people, including a woman, for allegedly operating an illegal call centre in Lahore, where borrowers who failed to repay digital loans were blackmailed using AI-generated obscene images.

The arrests were made during a raid after investigators obtained search warrants.

According to the investigators, 38 men and a woman were taken into custody, while 40 laptops and 41 mobile phones were seized from the premises. The devices were sealed and will be examined by forensic experts.

The investigators said the call centre was operating several instant loan applications.

Preliminary investigation showed that the loan applications sought access to borrowers' mobile phone galleries and contact lists when installed.

The investigators alleged that recovery agents subsequently used the information to pressure borrowers into repaying loans.

When borrowers failed to repay the loans within the stipulated period, call centre employees used AI tools to manipulate their photographs and create obscene images, they said.

The victims were threatened with distributing the manipulated images among their family members, friends and other contacts unless they made immediate payments.

Borrowers from digital platforms have previously complained of aggressive recovery tactics, excessive charges, access to personal information and harassment.

The Competition Commission of Pakistan warned in 2023 that some digital lending apps sought access to users' contacts and other personal information, while recovery agents had reportedly harassed and abused borrowers and their emergency contacts.

A man had ended his life in Rawalpindi in July 2023 after facing threats and pressure by loan-app recovery agents. The Federal Investigation Agency had arrested several suspects linked to the loan recovery operation.

The Securities and Exchange Commission of Pakistan later introduced additional safeguards for digital nano-lending, including limits on individual and aggregate borrowing, restrictions on the use of borrowers' personal data and requirements for ethical debt collection.

The regulator warned last year that operators of fraudulent lending schemes were increasingly using social media following action against illegal apps.