Chinese online lending app opens door to Uber-style debt collectors

Jiedaibao lets users armed with personal data try to recover unpaid loans for hefty commissions, raising concerns about abuse

PUBLISHED : Monday, 31 October, 2016, 10:00am
UPDATED : Monday, 31 October, 2016, 10:00am

An online lending firm has paved the way for Uber-style debt collecting services in China by giving the public access to debtors’ personal data.

But the move has raised concerns about the potential for abuse of the information.

Jiedaibao is an online platform launched two years ago to link lenders with borrowers. Users of its app can apply to recover debts owed through the platform by uploading their ID card number and a photo.

After a “verification” process of about a week, successful applicants gain access to overdue borrowers’ phone numbers, addresses and even ID numbers, with commissions of up to 40 per cent of the original loan for recovering the outstanding amounts.

Jiedaibao declined to say how many collectors it had registered or the sums involved, but it said was “outsourcing overdue loans to third parties, including individuals and institutions, to collect”.

It said it did background checks of applicants to exclude people with criminal records.

Borrowing and lending via online platforms is a small but vibrant part of shadow banking. The segment grew 400 per cent last year as investors sought higher returns than bank deposit rates.

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Jiedaibao claimed its platform had 128 million users with cumulative turnover of 80 billion yuan (HK$91 billion). It hit the headlines this year when it let women university students use nude photos of themselves as “collateral” to borrow money.

But without proper credit risk assessments, many of the loans have soured, raising demand for debt collectors. Online chat groups have sprung up offering advice on recovering the money. Tips include repeated calls to debtors, calling debtors’ relatives and paying “beggars” to protest near a debtor’s home.

About 20 debt collectors have called me so far this year and I told them I had no idea what happened. Can you help me to beg them to remove my details?
Woman who answered a number on a ‘debtors’ list’

Lawyer Liu Xinyu, from Dacheng Law Offices, said that without adequate training and oversight, debt collectors could easily cross the line into illegal activity, according to Thepaper.cn.

Jiedaibao said that if a loan was eight days overdue, the company would phone the debtor as a reminder. At 30 days “professional” phone calls would be made, and after 31 days, Jiedaibao would ask “third parties around the nation” to visit the debtor’s house, it said.

The South China Morning Post called 10 numbers on the “debtor list” from the Jiedaibao app, with eight numbers going unanswered or respondents hanging up.

The people who answered the other two numbers claimed they were not the debtors and were angry that their information was accessible to strangers.

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Yin Chenfeng, 35, said an acquaintance had used his account to borrow money and he refused to repay the loans. He said he would consider suing the company if it “affected” his life.

In another case, a woman answered the phone that according to Jiedaibao belonged to a man named Jiang Shikai, who owed 1.7 million yuan. The woman said she was an acquaintance of Jiang’s and had no idea where he was.

“Jiang is my daughter’s classmate and he used my number to register the loan account,” she said.

“About 20 debt collectors have called me so far this year and I told them I had no idea what happened. Can you help me to beg them to remove my details?”

The commission for recovering Jiang’s loans is 25 per cent of the total amount, or 420,000 yuan