Google cracks down on predatory loan apps

Google is cracking down on predatory loan apps by cutting off their access to “sensitive” data including debtors’ contacts, photos and location, after growing criticism that unscrupulous lenders are tapping the contents of borrowers’ smartphones for harassment and blackmail.

The tech company said on Wednesday it would update policies for financial services apps listed on the Google Play store at the end of May, so that “apps aiming to provide or facilitate personal loans may not access user contacts or photos”.

Details provided to app developers for Google’s Android mobile system also show that lending apps will, for the first time, be restricted from requesting access to users’ precise location, phone numbers and videos. The new policy covers apps offering personal, payday and peer-to-peer loans, but not mortgages, car loans or credit cards.

Studies have found hundreds of apps available through Google Play that have required prospective customers to grant them access to the most intimate information on their devices in order to proceed with an application. Consent is often obtained on the grounds that these details are needed to conduct a credit check or risk assessment.

However, some victims in regions such as India and Mexico have reported that lenders then used incriminating or doctored photographs to blackmail them or harassed their friends and family via their phone’s contacts book.

These apps exploit vulnerable individuals’ desperation for cash at a time when many households’ finances have been squeezed by rising inflation, energy prices and other living costs.

Research by cyber security company Lookout in November found more than 250 apps with more than 15mn combined downloads were available on Google Play in Africa, south-east Asia, India, Colombia and Mexico that it accused of “exfiltrating excessive user data from mobile devices and harassing borrowers for repayment”. Another 35 similar apps were also found on Apple’s App Store. Apple and Google removed all the apps following Lookout’s report.

Google declined to comment further on its policy changes. It already blocks apps that require loans to be repaid in full within 60 days or fewer.

As countries have introduced new rules designed to tackle the proliferation of digital lenders, Google and Apple already block apps in the US that charge an annual percentage rate of 36 per cent or higher and have introduced a range of other rules for India, Indonesia, Nigeria, Kenya and Pakistan.

Android has a 70 per cent share of the smartphone market, with an estimated 3bn active users around the world, including many in China where the Google Play store is not available.