Range of shady services on offer from 'dark-industry chain'

Lin Beibei joined a startup issuing unauthorized and unregulated online loans in Minhou county, Fujian province, in 2018. She ended up in prison later that year as a member of a criminal gang whose activities resulted in some borrowers committing suicide.

The 26-year-old was working for one of 13 teams lending money online formed by Wu Yongjie, 30, who started the business in August 2017, Caixin Weekly reported.

On Dec 20, 2018, Lin was sentenced to six years and two months imprisonment by Wenling People's Court in Zhejiang province.

Like all the company's employees, Lin's work included contacting potential customers, issuing them with small loans and collecting debts. She made an extra 100 yuan ($14.50) if she issued five loans a day and her commission was higher if she recovered a debt.

The teams first contacted people seeking loans through online promotions or telemarketing. They then sent QR codes to prospective borrowers, who had to scan the codes and fill in their personal details, including ID card and phone numbers.

Next, the teams used the databases of online loan companies to obtain information about borrowers' credit details. In addition, they asked each borrower to take a photo of their ID card and upload these, along with the contact information of all their relatives and friends, to team members.

Illegal receipts for loans were produced by using different types of software, originally intended to assist the digital finance industry, but which have also been used by criminal gangs.

Borrowing from Wu's teams incurred exorbitant rates of interest.

Lin and her team first used the loan receipts to urge borrowers to repay the money.

If this did not work, they threatened to digitally alter images of borrowers at funeral parlors, accompanied by humiliating words, and send them to their friends and families. If they were unable to contact borrowers, they harassed their friends and relatives by continually phoning them or sending them abusive messages.

When questioned by police, many of those on Wu's teams denied using naked photos of borrowers to threaten them. However, nude pictures and videos of some borrowers were found on Wu's phone. They had been told that these would be spread online if they could not repay their debts.

Lin was among the team members who threatened Wang Lili (not her real name), a senior student at a university in Shenyang, Liaoning province, to make her repay her debts, resulting in Wang committing suicide in May, 2018. Her family had also been threatened. Wang owed 3,500 yuan on April 25, 2018, but 23 days later the company said she must repay 13,000 yuan.

In early 2018, Wang Weiwei, a police officer in Wenling, launched a landmark investigation into online loans after the relative of a resident in his district borrowed 5,000 yuan and was told to repay 8,000 yuan just a day later.

Wang Weiwei decided to investigate after contacting the victim and finding more than 60 online loan apps on his phone.

The police officer said a "dark-industry chain" comprising a range of services was responsible for unauthorized online loans.

He said potential borrowers were lured by advertising, and some software stores would recommend online loan companies or put them in direct contact.

"The cornerstone of this chain is selling personal information online. It is no exaggeration to term these unauthorized and unregulated loans as telecommunication fraud," Wang Weiwei said.

Amid the rapid development of financial technology, a range of online financial services has mushroomed, including many that issue loans at exorbitant rates of interest.

Internet finance began to be regulated last year, when a limited number of licenses were issued.