The Competition Commission of Pakistan (CCP) has started a probe into app-based ‘nano’ and ‘micro’ personal loan providers, with initial findings indicating that the businesses were looking to provide services without fulfilling legal requirements of Non-Banking Microfinance Companies (NBMFCs).
“Locating owners of these applications has proven to be an impediment in the process of investigation as most of the applications have been observed to be operating from hoax addresses and contact details,” the CCP said in a statement on Thursday.
A CCP official told Business Recorder that an initial investigation revealed that these micro loan providers were charging higher rates than they have advertised, exploiting mainly the lower and middle income groups.
“I took Rs3,000 from an app (micro-loan providers),” said Mohammad Osaf, who fell victim to the app. “I returned Rs4,500 within the stipulated time but they are still calling friends and family after hacking into my mobile, telling them to ask me to return the loan. They are a scam.”
However, it seems that Osaf had allowed the app access to his contact list among other permissions while agreeing to terms and conditions.
The CCP said that they have also found instances of faulty claims of data privacy and security from these loan providers, and believes that they collect personal data on the pretext of offering loans.
The NBMFC law offers a framework to regulate nano-loans only above Rs10,000, whereas most of these applications are offering smaller amounts as loans.
“As per the initial findings, these applications have well over 10 million downloads by the general public,” the CCP said.
CCP says its inquiry committee has been consulting all concerned stakeholders and seeking relevant information for deliberations.
In this regard, meetings were also held with the Securities and Exchange Commission of Pakistan (SECP), the Pakistan Telecommunication Authority (PTA), and the Federal Investigation Agency (FIA).
“The commission’s emphasis in this investigation is to focus on the prohibition of deceptive marketing of these nano-loans to the vulnerable ordinary consumer and ensure that there are due disclosures and truth in marketing so that a consumer has the choice of making an informed decision,” it said.
The CCP has also urged the public to come forward and share information regarding these nano-loan mobile applications.