Chinese app misuses Bengal woman’s KYC details to create fake bank accounts

In March 2020, Shonali was fired from a lecturer position at a private university in West Bengal. Faced with a cash crunch, the 48-year-old speaker turned to Chinese instant loan apps. These apps provide loans instantly without collateral but with high interest rates. Starting in September, Shonali used the money she lent from these apps to meet her expenses. However, by October it had begun to fail.

These applications provide micro-loans of as little as 1,000. However, the problem here is that they have a much shorter repayment period and very high interest rates. Standard interest rates are not only 1% per day on average, but also compounded on a weekly or fortnightly basis. Also, they usually charge 14-15% of the principal amount as a processing fee.

To repay a loan, she ended up taking out loans from almost 25 of these instant loan apps. The principal amount cumulated to 2.4 million. It was a debt trap. Following this, she received countless threats and harassing calls to repay the loans. “We payed 7.8 lakh with interest in repayment of the loan. The harassment almost drove me to suicide, but I survived,” she told The News Minute. However, her nightmare was far from over.

In December, she briefly lost access to her HDFC, ICICI and SBI bank accounts. Someone had also changed their net banking credentials. Then she received an email from Kotak Mahindra Bank congratulating her for opening a bank account. She also received an OTP email from Bitbns, which is a cryptocurrency exchange.

How did the apps access his private information?

Shonali had to share his Aadhaar card details with these apps as KYC to avail the loans. Buying and selling digital currencies in cryptocurrency exchanges does not require KYC. However, if a bank account needs to be linked to any of these exchanges, a KYC verification is mandatory.

Reportedly, KYC data is used to open bank accounts. These bank accounts – linked to crypto exchanges – are used to siphon money overseas.

“There might be many fake bank accounts used for crypto exchanges that we don’t know about,” said Sandeep Sahoo, director of Savethem India Foundation. The foundation is made up of cybersecurity professionals who study instant loan and online betting apps operated by the Chinese. They also assist victims of such fraud and connect them with law enforcement.

Luckily, with the help of banks and Kolkata Cyber ​​Crime Police, Shonali was able to recover her lost money.

Who else is the data shared with?

When Shonali defaulted on her payment in one app, she was redirected to another app to repay the original amount by default. Apparently, once installed, this app gets full access to contacts, gallery, location and other details. Entities that run these lending applications are also linked to online betting and gaming applications. Thus, the user’s information is shared between several applications of which the user is not even aware. Of the 25 apps used by Shonali, four apps are already under investigation by Hyderabad Police.

Police are investigating numerous similar apps in Delhi, Karnataka, Tamil Nadu, Telangana and the Law Enforcement Branch. The Hyderabad Police Criminal Division had sought to remove hundreds of these apps from Google Play Store. However, cybersecurity researchers claim that many of these apps still work with value.

Police have arrested seven Chinese nationals and 35 Indians in the crackdown on the apps.

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