Loans that hijack your phone are coming to India
Lenders are turning to coercive loan apps that shut down smartphones if customers fall behind on payments
In 2021, I exposed a growing trend among retailers and online stores of employing a devious new lending method: using smartphones as collateral to get high-end devices into working-class people’s pockets. Vendors sold smartphones to first-time borrowers on high-interest payment plans financed by loan companies, but only after users install an undeletable app at the point of sale. The apps monitor repayment behavior throughout the duration of the loan. One late payment leads to instant blocking of the phone, rendering it useless.
For loan providers and smartphone sellers, this form of lending opens their products to a new class of consumers. But users purchasing phones on loan were bearing the brunt of the coercive repayment tactics built into their devices. My report was the first to offer a detailed account of the series of “nudges” or irritations, such as forcibly changing wallpapers and shutting down camera access, to repay loans.