Online loan apps charging up to 1,800% interest

September 02, 2025 (MLN):  Online loan apps in Pakistan have been charging exploitative interest rates as high as 1,800% while also blackmailing borrowers by accessing their phone galleries and contacts.

This was disclosed in a meeting of the Senate Standing Committee on Information Technology and Telecommunications, chaired by Senator Palwasha Khan, where officials from the National Cyber Crimes Investigation Agency (NCCIA) briefed lawmakers on the alarming rise in digital fraud.

It was informed that people borrowed as little as Rs. 5,000 for basic needs such as food but were pushed into debt traps through predatory practices.

The Securities and Exchange Commission of Pakistan (SECP), which licensed these companies in 2020 without stringent conditions, has since revised regulations by capping interest rates at 100% and prohibiting apps from accessing users’ personal data.

Authorities further confirmed that more than 90% of fraudulent loan apps have been shut down.

The problem, however, extends beyond mobile apps. The SECP warned earlier this year about scams on social media platforms such as Facebook, where ads falsely promise “interest-free” loans using the names of reputable organizations to appear legitimate.

Victims are lured into paying upfront charges for “processing,” “insurance,” or “verification,” or are tricked into sharing sensitive personal information. Once obtained, the scammers vanish without disbursing any loans.

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