The Competition Commission of Pakistan (CCP) has issued new guidelines aimed at preventing fraud and protecting consumers when using loan apps. The guidelines are part of a wider effort by the CCP to safeguard consumer rights in the digital space. The CCP deemed it necessary to alert the general public about the many issues observed and how to avoid loan apps fraud issues:
Competition Commission of Pakistan Guidelines for Avoiding Loan Apps Fraud
It is essential to ensure that the applications from which consumers are borrowing are duly registered and operating under a regulatory regime. The CCP has warned the users that these applications may take complete control of the user’s device by requiring the user to agree to standard access permissions for the app. To avoid this, the users are cautioned to carefully read the terms and conditions.
When applying for a loan through these mobile app-based micro-credit and nano-loan facilities, the users are asked to provide two or more emergency contacts, which are considered collaterals/guarantors by the operators. The public is made aware that the lenders will make calls to the consumer and the emergency contacts to recover the loan.
Protecting Oneself From the Scam
The guidelines have been issued in response to growing concerns about using loan apps in Pakistan. Many consumers have reported being subjected to fraudulent practices by loan app providers, including high-interest rates, hidden fees, and aggressive debt collection tactics. By following the guidelines, consumers can better protect themselves from fraud and ensure that they are making informed decisions when using loan apps.
Also read: SECP Warns Against the Use of Unregistered Digital Loan Apps
