Home » Business » Biz Special
Students despair over nude selfies for loans
Print Edition
REPORTS of loan sharks requiring nude selfies as collateral for loans have focused public attention on the plight of college student whose access to credit is limited.
Students are considered such a high-risk category that most banks refuse to issue them credit cards or standard consumer loans. That has opened the door to private, sometimes shady, lenders offering high-interest loans that can come with questionable strings.
The problem is that students are happy to go into debt but often incapable of repaying it.
Li Li, an alias for one of those caught in the debt trap, borrowed 500 yuan (US$76) from a middleman on peer-to-peer lending platform Jiedaibao, at a weekly interest rate of 30 percent. When it came time to repay the loan, she didn’t have the money and resorted to taking out another loan from the same lender. The situation spiraled out of control and she ended up owing 55,000 yuan that she couldn’t repay.
The lender refused to extend any further credit until Li provided a nude photo of herself holding her ID card, Southern Metropolis Daily said last week. If she missed debt payments again, the lender said the photo would be sent to her parents to coerce them into covering the debt.
There are no official figures available on the scope of student loan skulduggery, but Zhang Xuguang, a freelance writer covering the online lending industry, said he has been in touch with dozens of victims like Li. Known by the online pen name “Beijing Jiushu,” he said the Jiedaibao platform has “become a hotbed for swindles and usury.”
Apparently that’s not the only platform to blame. Last week, at one service on Baidu.com, Shanghai Daily found some nude photos, shot as collateral, selling for 20-30 yuan each. The next day, the photo gallery had been taken down by censors.
“This kind of ‘loan management’ is not legal and can lead to severe social problems and crimes,” said Sheng Jieli, senior director at peer-to-peer lending platform Iqianjin and a debt collector for more than 20 years. “It should be stopped and the perpetrators punished.”
Driven to suicide
The loans in question are different from student loans for tuition, fees and books. Those loans come under the supervision of the Ministry of Education, which sets interest rate parameters.
In the unregulated realm, consumer credit loans are available through online platforms, usually at exorbitant interest rates. Students commonly borrow the money to buy merchandise like smartphones, cameras, designer bags and — in the worst case scenario — illegal drugs.
There have been reports of students getting so heavily in debt that they are driven to suicide.
The China Banking Regulatory Commission said banks that can issue credit cards to college students only if parents act as guarantors of the debts. But even then, several commercial banks contacted by Shanghai Daily said they have stopped approving credit cards for students, but they issue debit cards that can be converted to credit cards after graduation.
That hasn’t stopped students from seeking credit, allowing non-bank lenders to step into the breach.
Among those services are IOU services on Ant Finance’s Huabei and Baitiao on JD Finance, which allow students to buy merchandise like iPhones and single-lens reflex cameras on installment.
Online Lending House, a web portal that tracks the sector, estimates there are more than 20 lending platforms providing installment buying for students. One of them, Fenqile, which means “happy to be buying on time,” reported that students bought about 10 billion yuan of electronics on installment in the first half of this year.
In a grayer area of lending, platforms like Jiedaibao provide the channel for lenders and borrowers to negotiate interest rates and lending periods, and also provide debt-collection services.
It’s easy for students hungry to buy things to fall prey to lenders in this unregulated environment, analysts said.
“These platforms don’t have access to personal credit ratings collected by banks, and even if they do, there are no credit ratings for students,” said Iqianjin’s Sheng. “Worse, they don’t sharing creditworthiness information with each other either. So it’s hard to track how much any given student is borrowing and whether the money is being repaid punctually. That means a student can tap different platforms without them knowing, until it’s too late.”
The debt debacle is exacerbated by the entry of shadowy middlemen, who use the lending platforms as entry channels for usury and try to seduce students into borrowing beyond their means.
“The platforms have the responsibility to vet borrower information, but some of them fail to do that,” said Zhang Yexia, chief analyst at Online Lending House. “A 10-20 percent interest rate for consumer loans is normal, but lending for more than 30 percent is not. Operators have the ability to curb abnormal trading activity, and they really should do that.”
Student loan defaults aside, the online lending industry is facing tough times and stiff competition.
There are more than 4,000 online lending platforms in China. Reports of fraud and irregularities in the industry have prompted regulators to stop the registration of any new firms with names related to Internet finance.
The CBRC is said to be drafting final rules that may address aspects of student credit.
Meanwhile, lending platforms are left to regulate themselves, which analysts said leaves the fox in the henhouse.
A spokesman for Jiedaibao told Shanghai Daily that the platform will probe allegations that nude photos were demanded for collateral and cooperate with the police if any criminality is discovered.
Zhang at Online Lending House is skeptical.
“I’m not saying that platforms should be totally banned from lending money to students but there have to be certain rules and mechanisms to ensure the industry plays fair.”
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
