Scam loan apps extorting Mexicans thrive on the Google Play Store

Scam loan apps extorting Mexicans thrive on the Google Play Store

MEXICO CITY, Aug. 12 A week after Pedro Figueroa borrowed 10,000 pesos ($500) from Jose Cash, a popular Mexican loan app, a barrage of online abuse began.

A series of WhatsApp messages flooded his phone, threatening to harm him – and his reputation – if he didn’t pay.

Figueroa had borrowed money to have a hard time, but soon fell into a cycle of debt and extortion as the app sent increasingly threatening messages, including threatening to send a fake photo to all of his acquaintances describing him as a pedophile.

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To pay off debt and de-stress, Figueroa, 34, turned to other digital apps to borrow more money and, within three months, raised $75,000 in debt via 27 apps.

All this prompted him to contemplate suicide.

“I fell into a deep pit of anxiety because of these apps,” Figueroa, an IT specialist, told the Thomson Reuters Foundation, using a pseudonym for fear of further reprisals.

Figueroa is one of more than 2,230 people who fell prey to fraudulent loan applications in Mexico between June 2021 and January 2022, according to data compiled by the Citizens Council for Justice and Security, a Mexico-based advocacy group. Mexico.

The Thomson Reuters Foundation has found 29 lending apps with millions of downloads in the Google Play Store that have been reported to authorities for extortion, fraud, violation of Mexican privacy law and abusive financial practices.

“We take this issue very seriously and are committed to providing a secure platform for billions of Android users. We have already taken action against more than a dozen apps and will continue to investigate,” a Google spokesperson wrote to the Thomson Reuters Foundation.

The explosion of predatory loan applications in Mexico is part of a global trend that authorities have struggled to contain.

A Reuters investigation last year found dozens of loan apps in India that violated Google’s own policies against short-term loans.

Investigators in Kenya last year launched an investigation into potential data privacy breaches by mobile lenders, while Philippine regulators identified dozens of mobile lending apps as violating local laws.

Big easy money

Figueroa downloaded Jose Cash at the end of March, lured by the app’s promise of a quick loan without a credit check.

The app has more than 1 million downloads and a rating of 4.8 out of 5 on the Google Play Store.

“What attracted me was its ranking and download count. He also had a catchy message that he would loan you up to $20,000 in less than five minutes,” Figueroa said.

Like most of the apps surveyed for this article, Jose Cash has thousands of similar five-star reviews written in broken Spanish, all praising the app’s interest rates and speed of approval.

The moment Figueroa downloaded the app, he inadvertently agreed to give her access to her contact list, call history, camera, location, SMS messages, social media accounts, and browsing history.

To register for a loan, also provide personal information – full name, address, a copy of his national ID and bank account number.

The app also contains information about the phone, including the IMEI number, year, model, and WiFi connection.

“I didn’t know then how my information would be used,” Figueroa said.

All 29 apps reviewed for this article collect sensitive information that experts say goes beyond what federal law allows.

Daphne Mendes, founder of the Privacy Watch Advisory Group, said that most lending apps follow a similar line in privacy policies — all of which are invalid even if a user agrees to share their data. “Why do lending apps need access to a user’s contact list or photos? It’s not really necessary for their purpose,” she said. What they do is arbitrary, illegal, and not allowed in any situation by law.”

Jose Cash did not respond to requests for comment.

Representatives of two apps investigated in this article denied any wrongdoing and said that loan apps potentially related to crimes used their company logos and names to impersonate them.

Difficult conditions

A combination of economic crisis, financial exclusion and easy access to the internet has led thousands of Mexicans to apply for illegal microloans, a trend exacerbated by Covid-19.

said Salvador Guerrero, president of the Citizens Security and Justice Council, a civil society organization that provides free legal services to victims of crime in Mexico.

This has created the conditions for the illegal crime market. »

According to the official 2021 survey on financial inclusion, 42% of adults in Mexico do not use any financial services, while more than half of them work in the informal sector and therefore do not have access to formal credit.

On the other hand, 84 million Mexicans have an internet connection and 96% use a smartphone, according to the data.

Figueroa loan application for 10,000 pesos approved within five minutes on Jose Cash. The fine print said the money was to be repaid in seven days at an annual interest rate of 360%.

Out of 10,000 Figueroa ordered, he received 5,500 pesos.

At the end of the week, I had trouble to pay the full amount. And he received, via WhatsApp, a photo of his face edited into a poster that read “Wanted for the rape of a minor”, which was sent to his contacts and social media.

He also received pictures of dismembered bodies that made him fear for his wife and children, while his friend received a video of explicit rape with threats to his family.

“Panic, fear and shame settled on me. I got to a point where I started contemplating suicide, and I wanted to stop everything,” Figueroa said.

The Thomson Reuters Foundation reviewed screenshots of photos sent to other borrowers, with their faces changed into graphic images with text claiming they are pedophiles, sex workers or wanted criminals.

Besides extortion and fraud, such aggressive methods of refunding money violate several Mexican laws against digital harassment and defamation, according to Mendes.

invalid law

Banking and financial lawyer Eduardo Abez, a former Mexican financial regulator, said that lending apps in Mexico operate within a legal loophole where they can offer loans without registration like regular financial institutions.

CONDUSEF, Mexico’s consumer credit regulator, has received more than 700 reports of online defamation – regarding loan applications since January, but it is powerless to act.

“We have no authority or authority. We can only act on complaints against authorized financial services,” said Oscar Rosado, President of CONDUSEF.

The Citizens Council for Justice and Safety has helped victims file more than 170 reports with local police and has released a list of 130 loan applications it says are implicated in interrogation, extortion, fraud and other crimes.

None of these cases have been resolved.

The Thomson Reuters Foundation found that at least 29 of these apps are still available on the Google Play Store.

Jose Cash is no longer visible – but the same product appeared with a different name with the same unique Google App ID, Privacy Policy, and Contact: SuenoCredy.

Warnings about the applications have come thick and fast – from cyber police in several Mexican states and even from the country’s president.

But in vain.

There are no names, no addresses. They also use VPNs, which makes it difficult to track, Mendes said. “We have wonderful privacy laws and institutions, but how can we prosecute crime if we don’t even have a name?”

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August 12 2022

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