Microloans are changing the way we buy goods and services. Generally, microlending services will lend anywhere between $50 and $50,000. In the United States, many people who apply for microloans are typically entrepreneurs trying to get their start-up off the ground. However, the story's a little different in China.
Microloans are incredibly popular with Chinese millennials. According to Ant Financial Services, over 170 million people in China born after 1990 have a microloan account with Ant Check Later, one of China's commonly used financial services. These 20-somethings are't just using microloans to finance luxury items cell phones and cars; they're using them to buy everyday goods like fast food and opting to pay them off in monthly installments. To Americans, this may seem silly, but in China, where the cost of living is incredibly high and the chances of getting a credit card are incredibly low, this method of e-commerce is a total game changer.
Of course, shady lenders quickly figured out a way to take advantage of young folks who are desperate for cash. Vice reported that a number of loan service providers are requiring young women to provide nude photos as collateral.
That's right, these girls have to send nudes just to get a loan approved.
What's worse is that if they fall behind on repayment, the lenders threaten to leak the nude photos to the victim's family and friends, on top of charging a crazy amount of interest. Some were even given the option to do sex work to pay their debt. In 2016 alone, ten gigabits of nude selfies of 161 women were leaked by Chinese microlenders, all of whom were holding their government ID photos. According to Resonate, most of the victims were aged 19-23 and came from China's underdeveloped regions. Although most of the loans were in the $1,000-2,000 range, many of the victims saw interest rates as high as 30%.
According to Reuters, the Chinese government is cracking down on unlicensed lenders to decrease the amount of hidden financial and social risks that come with obtaining an unauthorized microloan. Now, "unlicensed organizations and individuals are not allowed to conduct a lending business. Additionally, lending institutions are not allowed to give loans to borrowers who have no source of income or to mislead consumers into over-borrowing."
Let's hope these new rules will help take down these scummy lenders because it is truly disgusting how they are exploiting young women because of their financial hardships.