The Senate Standing Committee on Information Technology and Telecommunications, chaired by Senator Palwasha Khan, held a session where officials from the National Cyber Crimes Investigation Agency (NCCIA) revealed alarming details about the scale of online fraud in Pakistan, including that conducted via loan apps.
Officials disclosed that online loan apps were charging up to 1,800% interest rates, accessing users’ galleries and contacts, and blackmailing borrowers. “People borrowed as little as Rs. 5,000 for food, but ended up trapped in a cycle of debt,” one NCCIA official told the committee.
The Securities and Exchange Commission of Pakistan (SECP), which licensed these companies in 2020 without imposing conditions, has since revised regulations, capping interest at 100% and barring apps from accessing personal data. Over 90% of fraudulent loan apps have now been shut down.
These loan scams are not just prevalent in mobile apps, but also widespread on social media, promising users “interest-free” loans. Earlier this year, the SECP warned against ads on social platforms such as Facebook, falsely offering quick, interest-free loans with minimal requirements. These ads are using the names of reputable organizations to lure unsuspecting users into these promotions to falsely project legitimacy.
The users are then prompted to pay upfront charges under the guise of processing, registration, insurance, or account verification fees, or to share sensitive personal information. Once the payment or information is obtained, the scammers disappear without providing any loan.