Digital Lending and FedEx Scams: How to Identify These Frauds and Protect Yourself

by | Jan 19, 2024

To protect yourself from falling victim to these scams, it is essential to be aware of the red flags and take necessary precautions

As the world faced the unprecedented challenges brought about by the pandemic, millions of Indians found themselves grappling with job losses, financial difficulties, and mounting medical expenses. In such desperate times, many turned to instant loan apps to make ends meet. However, this situation also created an opportunity for fraudsters to exploit vulnerable individuals in need. Unscrupulous loan apps began to emerge, offering instant and short-term loans while preying on unsuspecting borrowers and charging exorbitant interest rates. To protect yourself from falling victim to these scams, it is essential to be aware of the red flags and take necessary precautions. Additionally, a new scam involving reputable courier companies like FedEx and BlueDart has surfaced, adding to the need for vigilance in the digital age.

Digital lending scam

Dos

a. Look for Red flags

i. Absence of a legitimate website associated with the loan app: Fraudulent loan apps often lack a website altogether, making it crucial for borrowers never to download any app that lacks an official website. Furthermore, some scams may list a website but falsely claim to be associated with a reputable Non-Banking Financial Company (NBFC). Borrowers must verify the authenticity of such claims by cross-referencing the information with the NBFCs official website.

ii. Whether the digital lender follows Know Your Customer (KYC) norms. Legitimate lenders will always adhere to these guidelines, ensuring a transparent and secure borrowing process. 

iii. Does the NBFC or bank ask for an upfront fee before processing the loan application? Genuine financial institutions deduct the loan processing fee from the sanctioned amount and do not demand upfront cash payments.

b. To ensure the legitimacy of a digital lending app, borrowers should verify whether the lender is registered with the Reserve Bank of India (RBI) or operates under the umbrella of an RBI-registered NBFC or bank. The RBI has introduced guidelines to regulate digital lending and protect borrowers from illegal practices.

c. Borrowers should insist on receiving a loan agreement that complies with the Fair Practice Code prescribed by the RBI. Fake lending apps often fail to provide the necessary loan agreements. By thoroughly examining the loan agreement, borrowers can ensure they are not being taken advantage of by unscrupulous lenders.

d. Practising due diligence is essential before applying for a loan from any digital lending app. Borrowers should check the app’s name, ratings, and reviews on the app store, as well as verify the physical address and contact information of the company operating the app. Several lending apps, such as Freecash, Mastermelon, Cashon, LoanEase, CrediPay, RupeeStar, EasyCredit, MartRupee, and TruBalance, were recently banned due to their malpractices.

Don’ts

Deny unnecessary permissions on the app

One significant tactic used by illegal lending apps is fraudulently collecting user data by requesting excessive app permissions. To protect personal information, borrowers should be cautious about granting additional permissions, such as access to contacts, location, and photos. These fraudulent lenders may misuse the collected data to extort borrowers even after loan repayment, threatening to share morphed pictures and videos.

FedEx scam

With the increasing reliance on e-commerce and courier services, a new scam has emerged, involving fraudulent individuals posing as employees of reputable courier companies like FedEx and BlueDart. The scam typically involves unsolicited calls to unsuspecting victims, informing them that their parcel has been seized by the law enforcement officers due to containing illegal substances, usually drugs. The scammer then demands a fine payment to have the parcel released. To make the scheme more convincing, the fraudsters often connect a conference call with a fake ‘law enforcement officer’ to further deceive the victim.

Protect yourself

In light of this scam, courier companies like FedEx have issued advisories stating that they never request payment or personal information via unsolicited calls, emails, texts, or mail. They are also not associated with any national or local law enforcement authorities in such matters. If individuals receive calls from someone claiming to be a customer care team member and directing them to communicate with law enforcement regarding a shipment containing illegal items, they should refrain from sharing any personal information.

End note

As digital services become more prevalent, so do the various scams and fraudulent activities. To protect yourself from falling victim to digital lending scams and courier-related fraud, it is crucial to stay informed and vigilant. By being aware of the red flags and adhering to the dos and don’ts mentioned above, you can safeguard your financial well-being and personal data in this rapidly evolving digital landscape. Always remember to verify the legitimacy of digital lending apps, never share unnecessary app permissions, and stay cautious of unsolicited calls and suspicious requests, ensuring a safer digital experience for all.

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