The presence of fake advertisements on social media platforms is not a new thing. In recent years, nefarious entities have exploited social media platforms to disseminate fake loan app advertisements. However, there may be a ray of hope for users in India who encounter such misleading content. According to a report published by The Indian Express, the Indian government is taking measures to prevent the distribution of such applications.
Rajeev Chandrashekhar, Minister of State for Electronics and IT, Government of India, said, “We will amend the existing information technology rules to prevent middlemen from hosting advertisements for fake loan apps.”
This is a significant concern for the Central Government as fake advertisements are running rampant across the web and especially on Facebook, Instagram and other social media platforms. The report said that fraudsters are able to post advertisements on these platforms for a fee, but later remove them when they are spotted. Ergo, if platforms continue to allow such advertisements to be broadcast on their platforms, they will lose “legal immunity”.
Additionally, Rajiv Chandrashekhar mentioned that the Ministry of Information Technology has been engaged in discussions with the Reserve Bank of India for several months. However, significant efforts have recently been made to address and mitigate this issue.
How do these ads work?
It is known that fraudsters usually lure unwitting victims to their platforms by using attractive (and unrealistic) advertisements. These advertisements, based primarily on loan applications, often promise fake interest rates and present a misleading narrative.
However, the crux of the issue comes to light when victims borrow money from these applications based on the promise of low interest rates, only to be informed of unknown fees and interest rates upon subsequent approval. Furthermore, these applications can access sensitive user data such as messages and contacts, which can be used for deceptive purposes and spamming.
According to The Indian Express, the market for fraudulent loan applications is worth around $700-800 million. Additionally, individuals who fall into this problem often become victims of suicide.
RBI receives updated ‘white list’
Currently, victims of such fraud indicate that online platforms fail to conduct due diligence due to the absence of regulatory standards, allowing fraud to go undetected. Moreover, in the past, the Reserve Bank of India (RBI) lacked a definitive list separating genuine and fraudulent loan applications. However, now a list has been shared with the central government.
“RBI has been working on the list of legitimate lending apps for some time, but after your report it has sent us a new list of loan apps that are being used by registered entities like banks and NBFCs. We will take action accordingly,” an official was quoted as saying by The Indian Express.
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