Bank of England governor wants tech giants to blame for online fraud: report
Bank of England (BoE) Governor Andrew Bailey wants Google and other tech giants to be responsible for monitoring and removing online financial scams, according to the Sunday Times reported. The move comes at a time when Indian regulators are also taking note of online financial frauds and how best to tackle the problem by forcing tech giants to watch them.
The governor lobbied Home Secretary Priti Patel to introduce the measure as part of the online mischief bill, Reuters told Reuters report told of the Times story. He added that the development in the UK comes at a time when more than £ 78million was stolen from unsuspecting clients via bogus investment websites last year, according to the report. Since the bill forces tech giants to tackle online child grooming and terrorism-related crimes, Bailey wants the proposed legislation to be extended to cover financial fraud as well.
Throughout 2020, there has been a surge in digital loan applications in India, some of which are unregulated entities and others that use an approved lender as a cover to provide payday loans. These apps are predatory on-the-fly operations that charge outrageous fees and interest rates, and use extortion and blackmail tactics to collect payments from borrowers. As a result, a number of borrowers have committed suicide in recent months.
In 2020, the Reserve Bank of India (RBI) received 1,509 complaints related to mobile digital lending apps in 2020, of which around 1,019 were against unregulated and unregistered digital lending apps. In response to the growing threat of bogus loan apps and suicides among borrowers, the RBI set up an internal task force in January to recommend regulations for digital lending platforms and mobile apps. He will report back in three months.
Third-party loan markets and apps that work with regulated non-bank lenders and banks must follow strict guidelines for fees, interest rates, collection practices, and risk management. Many predatory loan applications that have emerged over the past year or so operate either with small, non-bank lenders, who are licensed by the RBI, or outside of any rule or regulatory framework.
The RBI expects regulated lenders to ensure that their partners, third-party players, adhere to rules and regulations similar to those they are required to follow. But because central banks have a limited oversight function, many regulated entities go unnoticed and may engage in illegal, or at the very least questionable, activities.
The regulator and state police have pushed Google to clean its app store of these predatory lending apps as well.
All you need to know
- Hundreds of new digital lending apps have appeared after COVID-19
- These apps offer short term loans ranging from six days to one month at exorbitant interest rates.
- They offer loans for as little as 3,000 rupees at interest rates of 50-100% per annum
- Loan apps on the Google Play Store cannot offer such short term loans for less than 60 days depending on the Strategies
- Regulated lenders must offer borrowers a minimum of 30 days for loan repayment, so the loan term cannot be less than 30 days
- Regulated lenders are required to encrypt data or hide sensitive personal information for know-your-customer purposes
- App operators harass, intimidate and extort borrowers whenever there is a delay in repayment or even if the borrower has paid off principal and interest
- The list of app permissions that predatory lending apps request from the borrower effectively gives their operators illegal access to sensitive customer information.
- Google has removed over 400 of these apps from its Play Store in the past three months