ISLAMABAD: The Competition Commission of Pakistan (CCP) has found that several mobile apps offering nano loans don’t fulfil legal requirements, indulge in deceptive marketing and collect users’ personal data.

In a statement issued on Thursday, the commission said it had taken notice of the “various emerging concerns regarding mobile applications on Google Play Store offering nano/micro personal loans to vulnerable customers”, mostly belonging to the lower to middle-income class.

The CCP — mandated to protect consumers from anti-competitive practices, including deceptive marketing — said it conducted a preliminary investigation after reports appeared in the media about the practice found that several mobile apps were offering nano-loans without fulfilling the legal requirements of Non-Banking Micro Finance Companies’ (NBMFCs) law.

The NBMFC law offers a framework to regulate nano-loans only above Rs10,000, whereas most of these apps were offering smaller loans, it said, adding that these applications had more than 10 million downloads.

Its preliminary findings revealed, among other things, that these mobile apps had “contradictions between interest rate and processing fees charged from the borrowers versus the rates advertised”.

“There are also instances of faulty claims of data privacy and security, collecting personal data on the pretext of offering loans, the discrepancy in repayments, and the credit range advertised vis-a-vis those actually offered,” it said.

Based on the preliminary findings, the inquiry committee is authorised to thoroughly probe and submit an inquiry report to the commission with respect to any or all possible contraventions under the act against all nano-loan apps.

Published in Dawn, December 23rd, 2022

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