Lending app offering quick loan could be a scam: How to stay safe

Such offers are usually made by unregulated entities and could steal your data, harass you

 

Digital lending apps are attractive for people seeking quick funding as they offer instant approvals with minimal documentation. However, this convenience has also created opportunities for fraudsters to exploit people.

 

A growing number of complaints across India reveal a worrying trend, scammers are using unregulated loan apps to extort money through threats, intimidation, and data misuse. 

 

How loan app scams work

Fraudulent loan apps often appear legitimate but operate outside regulatory oversight, said Rahul Katoch, a cybersecurity expert & AI engineer at Impressico business solution. 

 

These apps typically:

 

• Are not registered with the Reserve Bank of India (RBI) or linked to any licensed Non-Banking Financial Company (NBFC). 
• Offer very small loans with extremely short repayment periods, sometimes just seven days. 
• Demand excessive permissions, including access to contacts, camera, photo gallery, and messages. 
• Resort to harassment, blackmail, and public shaming if repayments are delayed or refused.

 

“Victims often report receiving threatening calls and messages. In many cases, the fraudsters misuse personal data, including contact lists and photographs, to intimidate borrowers into paying far more than they owe,” said Katoch

 

Warning signs

If you're considering a loan through a mobile app, here are some red flags:

• The app is not available on official stores or has poor ratings. 
• It lacks a clear privacy policy or customer support. 
• The lender pressures you to repay via unauthorised channels, such as personal UPI IDs.

 

How to be safe

 

To protect yourself from digital lending scams, Katoch recommended:

   

• Use only apps registered with the RBI or NBFCs. RBI’s website has a list. 
• Avoid apps that request unnecessary permissions. Never allow access to your contacts, photos, or messages. 
• Read reviews and terms carefully before downloading or applying for a loan. 
• Report any suspicious apps to the National Cyber Crime Portal: www.cybercrime.gov.in.

 

Bottom line

 

Instant loan apps can be a helpful resource, but only when used with caution. Avoid shortcuts, verify the legitimacy of lenders, and protect your personal data.