Facebook, Instagram may lose legal immunity over fake loan apps advertisements
Over the years, fraudulent firms have mushroomed on the back of rapid growth in digital lending
The Centre is considering legislative measures to prevent social media platforms like Instagram, Facebook and Instagram from hosting advertisements of fraudulent loan apps as it looks to curb the distribution of such apps on the Internet, a top government official said Tuesday.
Online companies like Facebook and Instagram have become an important way for fraudsters to distribute dubious loan apps to users as these platforms allow them to market such apps, for a fee, and only take them down once they are flagged by users.
Last month, the IT Ministry had issued an advisory to social media platforms to take “additional measures” to ensure that they don’t host advertisements of fraudulent loan apps, warning that the “consequences” will be the “sole responsibility” of such intermediaries/ platforms.
Over the years, fraudulent firms have mushroomed on the back of rapid growth in digital lending.
While there are no official estimates, industry players said the illegal lending market could be at least $700-800 million.
Sources has reported around a dozen cases since 2020, where some of those caught in the trap of illegal loan apps had allegedly died by suicide.
A number of victims caught in the crosshairs of these apps pointed towards a common narrative: In the absence of any government and regulatory norms, online platforms carry out little due diligence, letting fraudsters openly advertise predatory loan apps.
At the time, the Reserve Bank of India didn’t have a white list of registered loan apps, or even a negative list which is updated, despite the government’s assurances.
