Why are APP loans so pervasive? Personal information leaks leading to frequent scam cases

Ride-hailing to claim coupons redirects to the loan application page. When you order takeout, the “installment payment” option is prominently listed. Open a photo-editing app, and “exclusive borrowing credit limit” pops up. To get VIP for listening to music or watching videos, you must first complete credit information underwriting… These days, loan and borrowing information has seeped from financial apps into all kinds of everyday service apps, becoming an ever-present “shadow” on the phone screen.

The all-pervasive, app-based lending has already drawn the attention of regulators. Since this year, six travel platform companies—including Ctrip, Amap, and Tongcheng Travel—along with five internet lending-assistance platforms with relatively high market activity—such as Jifengle, Qifu Borrowing Note, Niwo I Loan, Yixianghua, and Credit Fly—have been called in for talks by the National Financial Regulatory Administration due to issues related to financial business marketing and interest/fee charges.

Not long ago, the National Financial Regulatory Administration and the People’s Bank of China jointly issued the “Provisions on the Clear Disclosure of Comprehensive Financing Costs for Personal Loan Business,” requiring financial institutions to clearly disclose to borrowers, item by item, all components of the comprehensive financing cost.

The full penetration of app lending behind the scenes is a carefully balanced “financial ledger” calculated by platforms. How to generate greater commercial value from existing users stems from a platform’s business considerations. Financial credit businesses, with characteristics such as a high degree of standardization and large profit margins, have become the “favorite” for turning traffic into revenue. Besides running in-house credit businesses, platforms can also “route” users to partnering financial institutions, or charge technology service fees, or charge per successful loan disbursement—every click is clearly priced. Some say, “The end of the internet is finance.” With borrowing entry points embedded into various consumption scenarios, it becomes a “foregone conclusion” driven by business logic.

In order to do everything possible to get users to borrow, some platforms deliberately create gaps in users’ understanding, equating “installments” with “discounts,” disguising “annualized rates” with “daily interest,” and using information asymmetry to package lending services as “consumer benefits.” As consumers chase immediate gratification, they blur the boundary between consumption and debt, so that in the process of seeking small discounts they end up, without realizing it, carrying debt.

With algorithm technology providing precise reinforcement, lending marketing shifts from “casting a wide net” to “hitting the mark precisely.” By mining users’ consumption behaviors—such as browsing trails and payment habits—internet platforms can accurately judge users’ funding needs and borrowing willingness: the “payment pressure period” after credit card billing days, late-night e-commerce browsing peak times, and frequent use of installment payment services… These become the basis for algorithm-driven delivery of loan information. Some platforms collect users’ data excessively through methods such as default consent and summarized authorization, providing even more detailed data support for precise marketing, further intensifying the penetration of loan information. The loan information pushed by algorithms becomes a “tailor-made temptation” that targets users’ psychology directly, leading one to remark that “the algorithm understands better than you when you want to borrow money,” and before you know it you fall into a lending trap.

App lending is all-pervasive, which may not only keep borrowers in an unhealthy state of “financial tightness” for the long term, but may also trigger a series of social problems: some people fall into a vicious cycle of “using new loans to repay old ones” due to excessive borrowing; in severe cases, they carry massive debt, while fraud cases caused by leaked personal information occur frequently… To solve the problem fundamentally, you cannot rely only on platforms voluntarily regulating their services and users consuming scientifically and rationally. Ongoing “tough action” by regulators is even more critical.

It’s not inherently wrong to realize traffic value through financial services, but app lending’s all-pervasive reach has never been a simple problem of “platform noncompliant marketing.” Behind it are multiple factors intertwined: platforms’ precise calculation of users’ consumption psychology, the serious asymmetry of borrowing information, and the breakdown of rules under the drive of commercial interests. Only by further improving regulatory laws, strengthening regulatory measures, strictly standardizing the operating order of app lending, and severely investigating all kinds of violations can app lending business develop in a well-ordered and appropriate way—so that finance returns to its service nature and consumers’ lawful rights and interests are better protected. When all parties return to rationality and responsibility, those lingering “shadows” of borrowing on the phone screen can truly fade away.

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Responsible editor: Liu Wanli SF014