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Enforcement Directorate goes after predatory loan app operators: Report

The Enforcement Directorate (ED) and the Criminal Investigation Departments (CID) of various state police departments have begun investigating at least two dozen fake and predatory digital lending apps, many of whom are backed by Chinese actors, the Economic Times reported. The federal investigative agency and state police departments are also investigating money laundering charges against these apps and have issued notices to payment gateway providers, the report said. Cyber-crime police officials in Hyderabad told MediaNama that several state police departments that had begun investigations into these fake lending apps, beginning in December, are now coordinating with each other. They said that while they have frozen bank accounts with over ₹100 crore, the ED had reached out to them last week to provide information based on their investigations. So far, over 30 arrests have been made in Chennai, Mumbai, Bengaluru, Gurugram and Hyderabad. According to the report, payments companies Paytm and Razorpay have been sent notices by the ED and CID. They have been told to cancel accounts opened by these app operators and stop processing transactions, it said. Razorpay on its part has shut down at least 300-400 accounts that were used by these predatory loan app operators, at least 95% of transactions that were conducted by these apps went through its system, the report said citing unnamed sources. MediaNama has reached out to Razorpay for comments. Their responses will be added once received. A Paytm spokesperson declined to comment. These apps created merchant accounts on payment gateway platforms, circumventing…

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Reports on banking, payments, fintech and crypto-curencies. Additional reporting on media regulations, data protection and other areas.

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