Report: Scammers to Face Increasing Difficulty in Posting Fake Loan Application Ads on Social Media
The occurrence of fraudulent advertising on social media platforms is not a new thing. In recent years, bad actors have taken advantage of social media platforms to spread fake loan application ads. However, there may be a glimmer of hope for Indian users who encounter such fraudulent content. According to a report published by The Indian Express, the Indian government is taking steps to prevent the distribution of such apps.
“We are amending the existing IT rules to prevent brokers from hosting fake loan application ads,” said Rajeev Chandrasekhar, Minister of Electronics and IT, Government of India.
This is a major concern for the central government, as fake advertising continues to be rampant online and especially on social media such as Facebook, Instagram and others. The report adds that scammers can post ads on these platforms for a fee, but later remove them when they are detected. That is, if platforms continue to distribute such advertising on their platforms, they will lose “legal immunity”.
Further, Rajeev Chandrasekhar mentioned that the Ministry of Information Technology has been in discussions with the Reserve Bank of India for several months on the same issue. However, only recently have key steps been taken to address and mitigate this problem.
How do these ads work?
It is known that scammers typically lure unsuspecting victims to their platforms by using enticing (and unrealistic) advertisements. These ads are mainly loan applications and often promise fake interest rates and present a misleading narrative.
However, the crux of the problem comes when victims borrow money from these apps on the promise of low interest rates, only to be informed of undisclosed fees and interest rates after approval. In addition, these applications can access sensitive user data such as messages and contacts, which can be used for fraudulent purposes and sending spam.
According to The Indian Express, the market for fraudulent loan applications is worth around $700-800 million. In addition, people who get involved in this problem often commit suicide.
RBI gets update on ‘whitelist’
Victims currently trapped by such fraud indicate that the absence of regulatory standards results in online platforms failing to exercise due diligence to enable fraud to be detected. Also, the Reserve Bank of India (RBI) previously lacked a definitive list to distinguish genuine loan applications from fraudulent ones. Now, however, the list has been shared with the central administration.
“RBI has been working on the list of eligible loan applications for some time but has sent us a new list of loan applications used by registered entities like banks and NBFCs after your report came out. We will take action accordingly,” the official told The Indian Express.
