The Senate Standing Committee on Information Technology and Telecommunications, chaired by Senator Palwasha Khan, has uncovered shocking details about predatory practices by online loan apps in Pakistan.
Officials from the National Cyber Crimes Investigation Agency (NCCIA) revealed that some loan apps were charging interest rates as high as 1,800%, while also accessing users’ photo galleries and contact lists to blackmail borrowers.
“People borrowed as little as Rs. 5,000 just to buy food, but ended up trapped in a vicious cycle of debt,” an NCCIA official told the committee.
SECP’s role and regulatory action
The Securities and Exchange Commission of Pakistan (SECP) had initially licensed these digital lenders in 2020 without strict conditions, which opened the door for abuse. Following widespread complaints, the regulator revised its rules, imposing a 100% cap on interest rates and banning apps from accessing users’ personal data.
Authorities said that over 90% of fraudulent loan apps have now been shut down, but new scams continue to emerge.
Loan scams on social media
The menace is not limited to mobile apps. The SECP earlier warned against fake “interest-free” loan schemes advertised on Facebook and other platforms. These scams often misuse the names of reputable organizations to appear legitimate.
Victims are typically asked to pay upfront charges—such as registration, insurance, or verification fees—or to share sensitive personal details. Once payment or data is collected, the scammers vanish without providing any loan.
Protecting users from fraud
Authorities are urging the public to remain vigilant and avoid downloading unverified loan apps or responding to suspicious online ads. Official lending apps licensed under SECP regulations can be verified through its database.