Chinese Innovation: Nude Photo Loan Platform Adds Uber-Style Debt Collectors Feature
from the uberizing-everything-everywhere dept
Back in June, Western media picked up on a sordid tale involving the Chinese company Jiedaibao, a platform which facilitates loans between individual lenders and borrowers. Because of the private nature of the deals, loan sharks came up with a new twist on securing collateral for the money they lend out at exorbitant rates, described here by China.org.cn:
They often ask female students to pose naked with their ID and use these photos as collateral in their practice. If a student defaults on the loan, the loaners will threaten to show the nude photos to her family and friends.
In exchange, the students who agree to send nude photos can have a higher loan amount, ranging from 2 to five times as much. However, the loan interest rate can be as high as 30 percent a week.
Being able to borrow even more money at these ruinous interest rates just means the women get into deeper trouble even faster. When criticized for allowing this sexual and economic exploitation, Jiedaibao initially said:
The usury and nude collateral practices are part of a private trade deal between users. As a result, the company cannot interfere, and assert that users have to shoulder these risks by themselves. However, if these scenarios get worse, they urge users to contact the police.
Perhaps realizing that this didn’t really sound too good, the company later tweaked its response slightly, as the Guardian reported:
A spokesman for Jiedaibao condemned the “naked loans” and said the company would work with the police on any investigation of such practices. “This kind of naked loan is actually taking advantage of the online platform to operate an illegal usurious offline business,” they said.
Despite that (feeble) condemnation, and the outrage this modern-day usury provoked in China, the abuse seems to have continued. Last month, China.org.cn published another article on the topic, where it noted that some women have been been coerced into prostitution in an attempt to pay off the money they owe to unscrupulous lenders. According to a more recent story in the South China Morning Post (SCMP), Jiedaibao’s size — it has more than 128 million users with a cumulative turnover of about $12 billion — and lack control over the private deals made using its platform have led to the development of a serious problem:
Without proper credit risk assessments, many of the loans have soured, raising demand for debt collectors. Online chat groups have sprung up offering advice on recovering the money. Tips include repeated calls to debtors, calling debtors’ relatives and paying “beggars” to protest near a debtor’s home.
To address this issue, Jiedaibao has come up with a rather remarkable new feature for its platform:
Users of its app can apply to recover debts owed through the platform by uploading their ID card number and a photo.
After a “verification” process of about a week, successful applicants gain access to overdue borrowers’ phone numbers, addresses and even ID numbers, with commissions of up to 40 per cent of the original loan for recovering the outstanding amounts.
Some may applaud Jiedaibao’s idea of creating an Uber-like crowd of private debt collectors, but the scope for abuse is clear. And those suddenly finding themselves on the receiving end of these amateur debt collectors are unlikely to be so enthusiastic about Jiedaibao’s innovative approach.