Personal credit and pay later offers, luxury items sold on social media can lure you into the trap


UPDATED 25 June 2022 at 11:35 am to include a comment from ZestMoney

We Indians have rushed to embrace rapid advances in technology without the early warm-up that enabled many in the developed world to see its merits and risks. This is proving to be dangerous and expensive, especially for customers of banks and financial service providers. This week I bring you a story about how mere curiosity turned a person browsing a product into a borrower stuck with a personal loan they didn’t want; and how Instagram has become fertile ground for scammers to scam people with fake offers on luxury goods.

Personal loan and BNPL trap

Last year Ratnesh had downloaded the ZestMoney app which gave him a credit limit of Rs 20,000. With that, he bought a television and promptly paid all equivalent monthly payments (EMIs). A few days ago he wanted to check if his credit limit has increased since he is a good borrower and has paid on time. At that point he saw an offer for a personal loan of Rs. 1.40.

Ratnesh didn’t want the loan, but was curious about the interest rates on such loans, so he clicked the banner. He then reviewed the available EMI plans when he was sanctioned by ZestMoney for a Rs 1.40 personal loan without even asking for his approval. He immediately attempted to cancel and reverse the unwanted loan and was further shocked when he received a claim that he would have to pay a Rs5,600 processing fee to cancel the loan or be charged a high interest rate . Luckily for him, taking to social media ensured ZestMoney reached out to him and offered to waive the processing fee provided he pays back the full amount.

Ratnesh says: “The government is working hard to ban Chinese apps from paying out loans and harassing or blackmailing people, and this is where ZestMoney is looting customers. No doubt I am able. I can pay the Rs5,600 they charge as a handling fee but not everyone can.”

Such dubious lending is not just limited to apps. Many e-commerce sites offer customers a choice of Buy Now, Pay Later (BNPL) or refunds for purchases made with certain digicards. It seems pretty easy and cool to buy things and then gradually pay them back in EMIs. But be careful.

The interest component of such credits or loans (yes, these are loans made by lenders connected to the app and reflecting your credit report) is quite high. If you don’t pay the EMIs promptly, you could be caught in a credit trap.

In an email response to this article, a ZestMoney spokesperson said, “On June 18, the client contacted us and said they accidentally opted for the personal loan. He agreed to pre-finance the loan and requested a refund of the processing fee. The same was checked and refunded on a goodwill basis. It is unfortunate to note that our efforts to make the credit approval process smooth did not live up to the client’s expectations and we regret this experience.”

Counterfeiters Sell Fake Luxury Goods on Instagram

Amazon and Cartier, the luxury jewelry brand, have filed lawsuits in the United States against a social media influencer and eight other companies for advertising, promoting and facilitating the sale of counterfeit luxury goods via Instagram and other websites.

The scammers had posted photos of Cartier bracelets, necklaces and rings to Instagram. At the same time, they registered as sellers on Amazon and other e-commerce portals and posted generic items for sale there. The scammers posted an Instagram link telling customers that if they bought a generic item for sale on the e-commerce site, they would receive a quality Cartier product.

Although the case was filed in the US, such cases are not limited to that country. Also in India, many scammers and sellers of counterfeit products operate on social media.

They are particularly active on Facebook and Instagram, offering expensive looking products at a very low price. A buyer should be wary as these fabulous sounding offers may be fake products or cheap rip-offs. There is also no guarantee that you will receive the same product that is displayed on social media.

It is best not to buy goods based on social media posts without checking all the details, especially comments and reviews from other buyers (this also applies to e-commerce sites).

Stay alert to your cellular network

Replacing a SIM (Mobile Subscriber Identity Module) card is not easy for a common man. However, it is not easy for a scammer; but it can wreak havoc in a subscriber’s life. Sagar Singh Kalsi from Delhi found this out the hard way.

When his phone suddenly became inactive, he called the service provider only to find that a new SIM card had been issued for his number. This was just the beginning and more shocks were to come for Sagar. When he checked his bank account he found a loan of Rs 11 lakh that he was unaware of. There was also a transfer of Rs1 lakh from his account via internet banking. He lodged a complaint with the Delhi Police, who arrested three people after months of investigation.

The police investigation revealed that scammer Sunny Kumar Singh worked in the credit card department of a reputable bank and had access to customer records from where he gathered information about accounts that have exciting and enticing offers such as instant loans, jumbo loans and Smart EMI. Depending on the customer’s credit profile, banks make certain offers available via mobile apps or the internet banking portal. You can see it under Offers after logging into your bank account.

His accomplices Pavin Ramesh and Rakesh used to make fake IDs for these customers, replacing their own photos with the customer’s. After Sunny received a new SIM card for the customer’s number, he changed the email IDs so they were completely in the dark about fraudulent transactions being made on their accounts.

If you make it a habit to check your cell network and email regularly, you may be able to take timely action and get your money back.

KYC update scam

Everyone from the Reserve Bank of India (RBI) to banks have warned customers not to fall for know-your-customer (KYC) messages from unknown numbers. However, people not only reply to such messages by opening the URL/link provided in such messages, but also share the one-time passcode (OTP). A victim who did so lost Rs10 lakh from his bank account.

In this case, Delhi police arrested three people from Surat in Gujarat and Giridih in Jharkhand. After analyzing the scammer’s cell phone number and other information, the police found that money had been transferred to pay for some credit cards. Police then obtained the name and address of the cardholder and arrested Pravesh Mishra and his accomplice Brijesh Kumar from Surat.

Further investigation revealed that 30% of the looted money was used in Gujarat, while the rest was transferred to Giridih in other ways. The police then raided Giridih and arrested Kailash Kumar Mandal, the mastermind of this scam.

Let me reiterate that no one, including your bank, will ask you to update KYC from an unknown number and you don’t need to open a link in this message for that. Either block the number or report the caller to the nearest police station or report it to the Home Office (MHA) cybercrime portal. (National Cybercrime Reporting Portal)

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