The Senate Standing Committee on Information Technology and Telecommunications was informed that fraudulent loan apps have been exploiting citizens with exorbitant interest rates and blackmail tactics, trapping thousands in a vicious cycle of debt.
The committee meeting, chaired by Senator Palwasha Khan, heard a briefing from officials of the National Cyber Crimes Investigation Agency (NCCIA), who revealed that some apps were charging borrowers interest rates as high as 1,800 percent.
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Officials said many people borrowed as little as Rs. 5,000 to meet basic needs, only to be harassed and humiliated when they could not keep up with repayments.
According to the NCCIA, these apps illegally accessed users’ photo galleries and contact lists, later using the information to blackmail or shame defaulters.
The Securities and Exchange Commission of Pakistan (SECP) acknowledged that it initially licensed loan apps in 2020 without strict conditions, but said regulations have since been revised.
Interest rates are now capped at 100 percent, and apps are barred from accessing personal data. The SECP further confirmed that more than 90 percent of fraudulent loan apps operating in Pakistan have been shut down.
However, officials warned that online loan scams are not confined to mobile applications. Social media platforms such as Facebook are also being used to advertise “interest-free” loans in the name of well-known organizations.
Victims are lured with false claims of quick loans, then asked to pay upfront charges under the guise of registration, processing, or insurance fees, or to share sensitive personal information. Once payments or data are handed over, the fraudsters vanish.
Earlier this year, the SECP issued public warnings against such schemes, urging citizens to remain cautious and verify the legitimacy of financial services before engaging.
