CCP takes action against emerging concerns on google play store offering personal loans

December 22, 2022: The Competition Commission of Pakistan (CCP) has taken notice of the various emerging concerns regarding mobile applications on Google Play store offering nano/micro personal loans to vulnerable customers, mostly belonging to the lower to middle income class customers.

After the appearance of a news report in a leading newspaper, a preliminary probe was conducted, and it was noted that these mobile applications on Google Play store were offering nano-loans without fulfilling the legal requirements of Non-Banking Micro Finance Companies (NBMFC’s) law.

The NBMFC law offers a framework to regulate nano-loans only above Rs10,000, whereas most of these applications are only offering loans smaller than this. As per the initial findings, these applications have well over 10 million downloads by the general public.

The preliminary findings inter alia revealed that these mobile applications had contradictions between interest rate/processing fee charged from the borrower versus the rates advertised.

Furthermore, there are also instances of faulty claims of data privacy and security, collecting personal data on the pretext of offering loans, discrepancy in repayments, and credit range advertised vis a vis those actually offered.

The Commission is the first regulatory body that formally initiated an enquiry into the matter in September 2022, to probe possible violations by these mobile applications with regards to Section 10 of the Competition Act 2010, i.e., Deceptive Marketing Practices.

Based on the preliminary findings, the enquiry committee is authorized to thoroughly probe and submit an enquiry report to the commission with respect to any or all possible contraventions under the Act against all nano-loan mobile applications.

Moreover, the enquiry committee has been working on the case rigorously, consulting all the concerned stakeholders and seeking relevant information for deliberating the matter objectively.

In this regard, meetings were also held with the Securities & Exchange Commission of Pakistan (SECP), the Pakistan Telecommunication Authority (PTA), and the Federal Investigation Agency (FIA).

The Commission’s emphasis in this investigation is to focus on the prohibition of deceptive marketing of these nano-loans to the vulnerable ordinary consumer and to ensure that there are due disclosures and truth in marketing so that an ordinary consumer has a choice of making an informed decision.

Locating the owners of these applications has proven to be an impediment in the process of investigation as most of the applications have been observed to be operating from hoax addresses and contact details.

Moreover, the CCP is mandated under the Competition Act to ensure free competition in all spheres of commercial and economic activity, to enhance economic efficiency, and to protect consumers from anti-competitive behavior including deceptive marketing practices.

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