Indian Government Considers Legislative Measures to Tackle Advertisements of Fraudulent Loan Apps on Social Media Platforms
The Indian government is taking steps to prevent social media platforms like Facebook and Instagram from hosting advertisements of fraudulent loan apps. Minister of State for Electronics and IT Rajeev Chandrasekhar announced that the existing Information Technology Rules will be amended to prohibit intermediaries from hosting these ads. This move aims to curb the distribution of such apps on the internet and ensure platforms are more accountable for the content they display. However, these amendments may not be enforced until after the General Elections later this year.
Facebook and Instagram Under Scrutiny for Allowing Advertisement of Fraudulent Loan Apps
Facebook and Instagram have become popular platforms for fraudsters to distribute dubious loan apps to users. These platforms allow fraudsters to market their apps for a fee and only take them down once they are reported by users. Despite claims of using filters to prevent such ads, many of these apps, continue to offer their services even after being identified as fraudulent by the government. The government has issued an advisory to social media platforms, urging them to take additional measures to prevent these ads. However, legislative action is now being considered to ensure these platforms increase their due diligence before accepting such advertisements.
The Growth of Digital Lending Fuels the Rise of Fraudulent Loan Apps
The rapid growth of digital lending in India has led to the rise of fraudulent firms operating through loan apps. Although there are no official estimates, industry players believe that the illegal lending market could be worth at least $700-800 million. Numerous cases have been reported where individuals who fell victim to these illegal apps have allegedly died by suicide. The lack of government and regulatory norms allows fraudsters to openly advertise predatory loan apps through online platforms. This highlights the urgent need for stricter regulations and due diligence in the online lending industry.
RBI Collaborates with IT Ministry to Combat Fraudulent Loan Apps
The Reserve Bank of India (RBI) has been working closely with the IT Ministry to address the issue of fraudulent loan apps. The RBI recently shared a whitelist of lending apps with the Centre to help identify valid lending apps. This move comes after reports highlighted the lack of a white or negative list of registered loan apps, despite government assurances. The collaboration between the RBI and the IT Ministry aims to crack down on fraudulent loan apps and protect consumers from falling prey to these scams.
Indian Government Explores Additional Measures to Regulate Online Platforms
In addition to tackling fraudulent loan apps, the Indian government is considering other measures to regulate online platforms. One of the proposed measures is to outlaw deepfakes, misleading content generated through artificial intelligence, on the internet. This move aims to combat the spread of misinformation and protect users from potential harm. The government is also exploring the introduction of norms to regulate bias in algorithms deployed by online companies on their platforms. These efforts highlight the government’s commitment to creating a safer and more transparent online environment for users.
Analyst comment
Positive news: The Indian government is considering legislative measures to tackle advertisements of fraudulent loan apps on social media platforms. This move aims to curb the distribution of such apps on the internet and ensure platforms are more accountable for the content they display.
As an analyst, it is expected that the market will see an improvement in consumer protection with stricter regulations and due diligence in the online lending industry. This will help in reducing fraud and creating a safer and more transparent online environment for users.
