e loan apps were charging borrowers interest rates of up to 1,800%, while also misusing access to users’ phone galleries and contact lists to harass, threaten, and blackmail them. Many victims borrowed as little as Rs5,000 for basic needs like food but ended up trapped in a cycle of escalating debt. The Securities and Exchange Commission of Pakistan (SECP) had initially licensed dozens of such companies in 2020 but has since tightened regulations, capping interest rates at 100% and banning apps from accessing personal data. More than 90% of fraudulent apps have been removed, but scams have now shifted to social media platforms like Facebook and TikTok, where fraudsters run ads for “instant loans” and then vanish after collecting upfront fees or sensitive information. Officials revealed that earlier this year, SECP shut down 141 unauthorized loan apps with the support of other agencies. Despite this, scammers continue to exploit digital loopholes, leaving low-income families especially vulnerable. Victims often described how small loans snowballed into massive debts through hidden charges, rollovers, and intimidation tactics. Digital rights experts warn that Pakistan’s low financial literacy and weak consumer safeguards make it fertile ground for such abuses. “These companies operate like loan sharks in people’s pockets,” said Nighat Dad from the Digital Rights Foundation. The SECP is now reporting fake ads to the FIA and PTA while urging citizens to verify lenders against its official list of licensed companies. However, without stricter monitoring and stronger redress systems, many Pakistanis remain at risk of falling into the digital debt trap.
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