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Google cracks down on personal loan apps in India following abuse and outcry

Google said on Thursday it has pulled some personal loan apps from Play Store in India and was implementing stronger measures to prevent abuse following reports that said several firms were targeting vulnerable borrowers in the country and then going to extreme lengths to recover their money.

The Android-maker said users and government agencies in India recently flagged several personal loan apps and the company reviewed hundreds of them. The review found an identified number of apps violated Play Store’s safety policies and they were immediately removed from the Store.

Google, whose Android operating system powers 98% of smartphones in India, said it has asked the developers of the remaining identified apps to demonstrate that their apps are in compliance with applicable local laws and regulations. (In an email reviewed by TechCrunch, Google had asked a developer to provide documentation within five days.)

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“Apps that fail to do so will be removed without further notice. In addition, we will continue to assist the law enforcement agencies in their investigation of this issue,” the company said.

Users have identified several lending apps including 10MinuteLoan and Ex-Money in India in recent months that granted small ticket loans (typically in the range of $50 to $200) to people for short tenures without much verification to determine their eligibility, and then charged steep processing fees.

To avoid such abuse, Google said Play Store will only allow personal apps that require customers to make their repayment in 60 days or longer.

When borrowers struggled to repay their debt in the short period, collection agents on behalf of some lending apps among other ill tactics threatened to embarrass them in front of their friends, colleagues and family. In November, local newspaper Indian Express reported that a 23-year-old man committed suicide after being bullied by a money lending app. It's not the only reported suicide case linked to such harassment in recent months.

Local media also reported that police in the city of Hyderabad recently froze bank accounts holding $58 million for alleged scams conducted through 30 lending apps, none of which had approval from the nation's central bank. A preliminary investigation found that these apps had processed nearly $2.9 billion through 14 million transactions.

Srikanth L of CashlessConsumer, a consumer collective on digital payments, told TechCrunch that Google took too much time to turn its attention to this issue. Srikanth, who has been tracking online lending apps in India for several quarters, said more than 100 apps in the last 10 days and about 450 in recent months had disappeared from Google Play Store, citing his own analysis.

He also criticized Google for not doing enough to stop apps from gleaning a wide range of data from a customer's Android phone. "They still don't mandate these apps to disclose their website and physical address," he added.

“To protect user privacy, developers must only request permissions that are necessary to implement current features or services. They should not use permissions that give access to user or device data for undisclosed, unimplemented, or disallowed features or purposes," wrote Suzanne Frey, vice president, Product, Android Security and Privacy, in a blog post.

"Developers must also only use data for purposes that the user has consented to, and if they later want to use the data for other purposes, they must obtain user permission for the additional uses,” she added.

Thursday's move comes months after Google stepped up its efforts to crack down on fantasy sports apps in India.