Author: Daniel Tan
Written at: 10 Dec, 2024
Very often, people may overlook the threat of illegal moneylenders, assuming they are too wise to fall into their trap. However, when a neighbour or a domestic worker borrows from such lenders, the trouble can still land at your doorstep.
Such is the case for Mr Alan, who received 120 calls over three days from various unlicensed money lenders when his employee was the one who borrowed from them, as reported in this CNA article. In fact, it was reading the post of a Venture capitalist, on social media - where his domestic worker borrowed from 5 unlicensed moneylenders and threatened his wife and 2 young daughter’s safety while he was overseas and he was so helpless about it that sparked this article.
Illegal moneylenders often don't just target the borrower and their methods often involve harassment tactics that affect entire communities. From splashing paint on doors to making repeated nuisance calls, these actions create stress and fear for neighbours and other innocent parties.
Some individuals turn to unlicensed moneylenders despite the risks due to a combination of personal circumstances, financial desperation, and lack of viable alternatives. For instance:
People with bad credit scores may face rejection from licensed lenders, leaving them with no other option. Unlicensed moneylenders often provide loans quickly, with minimal documentation or background checks, making them appear convenient.
This is where FindTheLoan.com can help. By allowing borrowers to connect to multiple vetted lenders through a single application, we greatly improve their chances and speed of obtaining a legitimate loan.
Often, borrowers may not fully understand the consequences of dealing with illegal lenders—such as exorbitant interest rates or illegal recovery methods—or may not even realize they’re borrowing from an illegal moneylender.
Here are some telltale signs of posts or advertisements by illegal moneylenders:
According to Section 16(3) of the Moneylenders Act (Cap. 188), moneylenders are not permitted to advertise on social media and are permitted to advertise their moneylending business only in the following media:
a. Business or consumer directories in print or online media;
b. Internet websites belonging to the licensee; and
c. Advertisements placed within the approved place of business, or on the exterior side of the wall, door, shutter, gate or window of the approved place of business.
Also, moneylenders are not permitted to share their mobile numbers in any advertisements. But do a quick search on Facebook and Telegram with keywords like quick cash or moneylender and you will easily find hundreds of Facebook groups with many of them having hundreds of members, of which, many appear to be Malaysian, migrant workers and foreign domestic workers responding to their posts.
At the same time, banks and non-banks alike will typically have their own Facebook pages and websites instead of posting on those random groups on Facebook and Telegram. Their number can also be easily found via a Google search so you can easily confirm if you are indeed contacting the right entity.
The number of people responding to them is very concerning and we have tried to do our civic duty by reporting them to Facebook, Telegram and the police. But they are appearing as fast as being taken down.
Responding to suspicious loan advertisements can lead to falling victim to loan scams too. These scammers often lure individuals with promises of quick and easy loans, only to impose hidden fees, ask for upfront payments, or use aggressive tactics to collect repayment. In many cases, the loan terms may be deceptive, with exorbitantly high interest rates or impossible repayment conditions, putting borrowers in a cycle of debt. Loan scams can also work by offering attractive interest rates and requiring a borrower to send a huge amount to them before the loan can be processed or stealing your banking credentials which we touched more on, here.
Licensed moneylenders, on the other hand, must adhere to strict laws regarding how they word their contracts and ensure that borrowers have a clear understanding of the terms of the loan.
Together, we can combat the spread of illegal moneylending. Be alert to suspicious behaviour, such as frequent visits by strangers or unusual activity in your neighbourhood. If you suspect illegal moneylending, report it to the authorities or platforms like Facebook and Telegram where such advertisements proliferate.
Every small action contributes to a safer community. You can also consider sharing this article so more can be educated on spotting illegal moneylending activities and scams.
--
If you enjoyed this article, we’d love for you to share it with others who might find it valuable. Our goal is to bring you finance insights that Big Finance doesn't want you to know, but they often get overshadowed by Big Finance's content due to the large budget they have. Every share helps amplify our work and reach more readers like you!
Subscribe here for more! Give us a try — it’s free to get your personalized loan offers today!
Share on: