On December 22, acting on a tipoff, Indian police swooped on six call centers in Hyderabad, Gurugram, and Bangalore, from which nearly 1,500 telecallers had been working to extract money from indebted and often vulnerable Indians, resulting in 24 arrests. More raids and arrests followed; the next week, a Chinese national and alleged kingpin, Zhu Wei — known as Lambo — was apprehended as he tried to flee the country.

Over the past few months, an economic contraction and an increase in unemployment due to the Covid-19 pandemic have led to thousands of Indians turning to online loan apps to meet their day-to-day expenses. These apps often charge interest rates as high as 40% for sums as low as $70. Some are legitimate, regulated businesses, but with government oversight of the sector lax, illegal players — many of them operated by Chinese companies — have thrived.

Some analysts say that Google, whose Android operating system is by far the most commonly used in the country, bears some responsibility for the rise of these predatory lenders. In the last year alone, more than 750 loan apps have been added to the Google Play store. Many seem to violate the company’s policy, which doesn’t allow personal lending apps to list if they ask users for repayment less than 60 days after a loan is issued. 

“By Google’s own policy, it’s illegal,” said Srikanth Lakshmanan, a member of Cashless Consumer, a consumer protection collective for digital payments. “These instances have clearly shown that the system of enforcing [Google’s] policy is broken.”

The illegal payday lending business is large and sophisticated. KVM Prasad, Hyderabad’s assistant commissioner of police for cyber crime, estimates that rogue apps have handled $3 billion (220 billion rupees) in transactions over the past year. Some of the companies, such as Cash Guru, Udhaar Loan, Go Cash, and Krazy Rupee masquerade as legitimate payday lenders to dupe users. When it comes to calling in their debts, they become predatory, harassing borrowers by sending abusive messages, publicly shaming them on social media, and calling their relatives and friends.

Since September 2020, Anil Rachamalla, an internet ethics and digital wellness expert, has been approached by around 190 people who have been targeted by payday lenders and has been collecting their testimonies to build a legal case. He now runs a support group for 68 victims. Typically, he said, when a user installs an online loan app, they agree to give access to their mobile’s GPS location, gallery, and contact list. Once the user uploads proof of identification, the app credits an instant loan ranging from $60 to $1,000 to a mobile wallet or bank account, deducting up to 30% as a processing fee. The term of the loan is usually between seven and 15 days, after which point, the harassment begins.

WhatsApp

Telecallers working for the loan apps start with subtle warnings by SMS, followed by verbal abuse. “If [the borrower] is not lifting his phone, his phone is going to ring the next 100 times,” Rachamalla said. The app’s operators use their access to the borrower’s contacts list to create WhatsApp groups of their friends and families, in which they brand the user as a “fraudster” and threaten them with fake court notices and police complaints. 

“I have seen people who are [holding their phones] shiver out of fear,” Rachamalla says.

At least 11 people have died by suicide since November 2020 after falling into these debt traps. Sometimes, telecallers force defaulters to borrow from other apps to repay their existing loans. Rachamalla documented one user who started out with a $75 loan from Udhaar Loan — the rip-off version of a legitimate payday lender, Udhaar. To repay it, he ended up more than $1,000 in debt, having borrowed from 15 other apps to cover his arrears.

Surprisingly, most of the victims are “not any carpenter or mason,” Rachamalla said, but “highly qualified people working at the best of the multinational organizations.” He said that the list of victims included people working at Google, Amazon, and Apple who had taken loans after losing their jobs during the downturn. 

Google’s reticence in dealing with the proliferation of these apps has disappointed groups working to mitigate the impact of predatory lending. Lakshmanan said that his analysis in November showed that many of these apps had no registered entities, fake addresses, and identical boilerplate privacy policies, all of which should have been red flags. However, some of the apps were downloaded over a million times. 

Udhaar Loan was removed from the Play store in only late December, after Ravi Sethia, the co-founder of Udhaar, filed a copyright infringement complaint with Google. In November, a woman attempted suicide after a telecaller for Udhaar Loans demanded nude videos when she was on the verge of defaulting on her loan. “People thought it was us, and they were bombarding us,” Sethia said. 

Google declined to comment but pointed Rest of World to a January 14 blog post, which said that they were dropping from the Play store apps that were unable to demonstrate compliance with local laws.

Critics say that the company should have acted sooner but also that the failings are widespread — payment services providers and regulators all had opportunities to prevent tragedies from happening. “Everybody should take responsibility,” Rachamalla said.