The Fintech Debt Trap
Online lenders are preying on desperate borrowers and could trigger a new consumer financial crisis
The economic cataclysm brought on by the coronavirus caught American consumers in an extremely precarious position — one that was evident well before more than 50 million people filed for unemployment. By the end of last year, Americans had racked up nearly $4.2 trillion in consumer debt, not including mortgage debt — a record high. The greatest contributor to this surge was not credit card spending or student debt or auto loans, but something newer and, for many borrowers, even riskier: high-interest personal loans, increasingly offered by online financial technology companies known as “fintechs.”
https://theintercept.com/2020/08/30/fintech-debt-personal-loans-economic-crisis/
#fintech #personal #loans
Online lenders are preying on desperate borrowers and could trigger a new consumer financial crisis
The economic cataclysm brought on by the coronavirus caught American consumers in an extremely precarious position — one that was evident well before more than 50 million people filed for unemployment. By the end of last year, Americans had racked up nearly $4.2 trillion in consumer debt, not including mortgage debt — a record high. The greatest contributor to this surge was not credit card spending or student debt or auto loans, but something newer and, for many borrowers, even riskier: high-interest personal loans, increasingly offered by online financial technology companies known as “fintechs.”
https://theintercept.com/2020/08/30/fintech-debt-personal-loans-economic-crisis/
#fintech #personal #loans
This lending app publicly shames you when you’re late on loan payment
Okash, a popular fintech app in Kenya and Nigeria, threatens users to notify everyone on their contact list when you fall behind on your loan payments.
The only person David Kiragu lied to about the texts was his mom. To those close to him, like his partner, friends, former schoolmates, and work colleagues, he explained what was going on. To more distant contacts, including annoying relatives, he said nothing.
His mother probably knew he was lying — mothers often do — but she let it slide.
“I couldn’t tell her the truth,” Kiragu said to me last December. “So I told her it was one of those prison scams and she should ignore it.”
He owed money. Not a lot of it, but that didn’t matter. His fintech creditor was still telling everyone in Kiragu’s inner circle that he was a deadbeat.
It happened like this: Toward the end of March 2018, Kiragu found himself in a bind. At 32, he earned a solid income as a manager at an iNGO in Nairobi. But for the first time in his life, he couldn’t make rent.
https://restofworld.org/2020/okash-microlending-public-shaming/
#Africa #fintech #personal #loans
Okash, a popular fintech app in Kenya and Nigeria, threatens users to notify everyone on their contact list when you fall behind on your loan payments.
The only person David Kiragu lied to about the texts was his mom. To those close to him, like his partner, friends, former schoolmates, and work colleagues, he explained what was going on. To more distant contacts, including annoying relatives, he said nothing.
His mother probably knew he was lying — mothers often do — but she let it slide.
“I couldn’t tell her the truth,” Kiragu said to me last December. “So I told her it was one of those prison scams and she should ignore it.”
He owed money. Not a lot of it, but that didn’t matter. His fintech creditor was still telling everyone in Kiragu’s inner circle that he was a deadbeat.
It happened like this: Toward the end of March 2018, Kiragu found himself in a bind. At 32, he earned a solid income as a manager at an iNGO in Nairobi. But for the first time in his life, he couldn’t make rent.
https://restofworld.org/2020/okash-microlending-public-shaming/
#Africa #fintech #personal #loans
Rest of World
This lending app publicly shames you when you’re late on loan payment
Okash, a popular fintech app in Kenya and Nigeria, threatens users to notify everyone on their contact list when you fall behind on your loan payments.
Loans that hijack your phone are coming to India
Lenders are turning to coercive loan apps that shut down smartphones if customers fall behind on payments.
Last December, 28-year-old Roshan Zameer was gripped with panic. His phone had suddenly stopped working. As an electrical repairman in the outskirts of Bangalore, Zameer needed to make a call to check if the main electricity line was turned off before he started work at a building: information crucial to his safety. A message appeared on his screen: “Pls pay the amt via online through our website to unlock your device.” His Samsung Galaxy A71 phone was then blocked by a pre-installed app, restricting access to all of his phone’s functions, including the ability to make phone calls.
Zameer had bought the cellphone secondhand online in August. The original owner, it turns out, purchased it with the promise of paying off the device through equated monthly installments (EMI), a fixed payment schedule. Zameer didn’t know the phone was on a payment plan until the day after he bought it. 15 days after he purchased it, the device automatically locked and alerted him that he was roughly $40 behind. He’s been stuck paying monthly installments ever since.
https://restofworld.org/2021/loans-that-hijack-your-phone-are-coming-to-india/
#India #loans #phone #hijack #privacy
Lenders are turning to coercive loan apps that shut down smartphones if customers fall behind on payments.
Last December, 28-year-old Roshan Zameer was gripped with panic. His phone had suddenly stopped working. As an electrical repairman in the outskirts of Bangalore, Zameer needed to make a call to check if the main electricity line was turned off before he started work at a building: information crucial to his safety. A message appeared on his screen: “Pls pay the amt via online through our website to unlock your device.” His Samsung Galaxy A71 phone was then blocked by a pre-installed app, restricting access to all of his phone’s functions, including the ability to make phone calls.
Zameer had bought the cellphone secondhand online in August. The original owner, it turns out, purchased it with the promise of paying off the device through equated monthly installments (EMI), a fixed payment schedule. Zameer didn’t know the phone was on a payment plan until the day after he bought it. 15 days after he purchased it, the device automatically locked and alerted him that he was roughly $40 behind. He’s been stuck paying monthly installments ever since.
https://restofworld.org/2021/loans-that-hijack-your-phone-are-coming-to-india/
#India #loans #phone #hijack #privacy
Rest of World
Loans that hijack your phone are coming to India
Lenders are turning to coercive loan apps that shut down smartphones if customers fall behind on payments.