Loan shark+creeper makes a potent mix
Online peer-to-peer(P2P) lending has developed into a promising and comfortable solution to linking individuals soliciting financing to a wealth of lenders, resulting in an explosive growth within the pseudo-SNS, financing industry. Because it provides a window for individuals to bypass some of the bureaucratic and stringent restrictions of official banking loans while allowing lenders to charge a higher interest rate in return for a quickfire fix, P2P lending platforms have become extremely popular, and as in the case for all online offsprings, they have developed their own set of independent rules and practices that work slightly different than other financial systems. Unfortunately, some of the P2P finance world's street-credos seem to be a bit too shady for comfort.
Some of China's youth are getting naked for cash/Image: Reuters/Kim
According to the Beijing Youth Daily, a new trend has emerged in China’s popular online P2P lender platform called Jiedaibao, where loan sharks demand women seeking loans to provide naked photos of themselves as collateral in exchange for greater lending sums. As the nation’s online P2P lending market begins to flourish, loan-sharks seem to have taken advantage of young women that are lured in by the prospect of easily borrowing greater sums.
With ‘naked holding’, borrowers can get roughly two to five times the amount of average sums, but when they can’t repay the usurious interest rates, lenders have been reported to blackmail the borrowers by threatening to publish the photographs, with some even soliciting sexual services. The bulk of this shady practice takes place on JD Capital’s Jiedaibao website where individuals can lend or borrow money by striking their own, sparsely regulated arrangements. Despite its advantages, such lax, person to person settling of terms has potentially dangerous repercussions.
The Jiedaibo P2P lending system/Image: Jiedaibao
It seems that these creeper loan sharks are purposely preying on young users who have little financial experience, convincing them to agree to upwards of 30% weekly interests rates and providing the collateral of a nubile shot while carrying their identification cards. Unfortunately, the practice is apparently an “open secret” that has illicitly been in practice for quite some time now.
Lin Xiao(a pseudonym of course), a young university student from a provincial town, borrowed about 500RMB ($75) from a lender in February via Jiedaibao with entrepreneurial dreams of opening up an online store. Short-sightedly(WHY Lin, Why??) agreeing to terms at a 30% interest on a one-week loan, she began lending more money from multiple sources on Jiedaibao to repay the debt. Her debt quickly ballooned to 250,000RMB ($38,000) as she struggled to keep the viral interests at bay by taking on greater sums to cover impending deadlines.
She eventually supplied a nude photograph of herself in exchange for a larger loan, and was forced to provide personal contact information and addresses for family members. Obviously, she was unable to meet the deadline and the loan shark threatened to show the photographs to her family and friends. According to the New York Times, as the deadly Möbius Strip of debt widened, so did the distribution of Ms.Lin’s naked photographs, until eventually three separate online lenders had a copy of them. She was forced to reach out to her family for help in order to begin clearing her debt, but she said “I still owe about 60,000 RMB”, about $9,000. Surely Ms. Xiao is not the only one to have predators rob her of her money and dignity.
Screenshots of threatening debt collection messages/Image:Weibo_beijingjiushu via Sixth Tone
Jiedaibao, the grounds upon which such shady transactions are occurring, recently received a record breaking 2 billion RMB ($304 million) funding, the highest in internet finance. A spokesperson for the company told the Guardian on Wednesday that it condemned the naked loans and that the company would work with the police on any investigation of such practices. “This kind of naked loan is actually taking advantage of the online platform to operate an illegal usurious offline business,” he added. Oddly, Beijing Youth Daily quoted a different position from Jiedaibao, saying that the company responded to the widespread practice in an aloof manner: “Risks are the borrowers’ responsibility.”
People will always need some sort of financial assistance at some point in their lives. A healthy amount of debt is beneficial for the economy at large as it inspires the borrower to aptly play a part in enriching the financial sector by duly paying off his or her debt through hard work and diligence. In that sense, the fledgling online P2P lending industry is promising since it allows the young and overlooked to be connected to a wide-arrange of fiscal sources. However, as shown in the case of china’s ‘naked loans’, the flourishing industry has had its fair share of creepy assholes leer their heads before unknowing users that are, quite literally, laid bare naked before a hostile world.
Jiedaibao is home to easy loans and predators alike/Image: Jiedaibao
In wake of reports about naked loans, thousands of sympathizing netizens condemned the practices and called for the government to cease its negligence and assert a regulatory authority. Others had less sympathy for those who engage in online lending, saying that the responsibility is on the borrower to determine whether or not they can or cannot pay off a loan. Yes, the government can’t bail out a person for every single bad call that they make throughout their life. P2P lending is after all, a business, and we can’t put every street peddler in jail for selling a naive child a candy-cane that will supposedly make them taller.
But naked photos are a bit too much. What if a minor was to somehow find his or her way into the site? To end on a fish analogy, it’s a fish-eat-fish world and though there’s always a bigger fish, loan-sharks are by far the fishiest. Be a smart borrower, not a naked one.