Microloan systems have revolutionised the way we shop. Desperate for the latest, very slightly updated iPhone? Sign up for a month-to-month plan and break that price tag down into manageable morsels. Always wanted a jacuzzi but too cash poor to front up for it? Sign up to Afterpay and for a series of $10 monthly instalments you could have that tub paid off in 60 years.
It’s the way of the future, and Chinese millennials are diving in headfirst. They’re not just using their microloan accounts to buy big ticket items like TVs and Teslas, either—some fintech companies are also letting people pay for small daily purchases like burgers or biscuits on a long-term, monthly instalment basis, the South China Morning Post reveals.
In a country where cost of living is high and the chances of getting a credit card are relatively low, this new form of e-commerce has opened up a world of possibilities for a whole lot of Chinese millennials. Because it’s 2018, though, there’s also a dark side to the system. Sure, you can get a 475 gram box of Oreos and pay it back in monthly instalments of 41 cents over three years, or go jetski-shopping with peanuts to your name. But first you might have to send some nudes.
A number of dodgy lenders have realised that young shoppers are desperate for loans, and are demanding that customers hand over naked selfies as collateral. If the repayments aren’t made on time, the money lenders threaten to leak those selfies to the individual’s family and friends. Many also charge interest on the original loan, thus burying their victims further in debt and forcing them to send more pictures and videos. These kinds of services are known in China as "naked loans."
In 2016 a total of 10 gigabits of nudes from 161 young women—all of who were holding their photo IDs—were leaked online by microlenders. Most of the victims were aged between 19 and 23, and typically borrowed sums of money between $1,000 and $2,000, according to state media outlet China Youth Daily. Others were reportedly given the option to do sex work in order to pay off their loan.
So rampant is the problem of naked loan services in China that last year the country’s financial regulators vowed to crack down on unlicensed microlenders, Reuters reports. A multi-ministry task force said that “Amid the rapid development of cash loans—while they have played a role in meeting the normal credit needs of some groups—problems such as over-lending, repeat borrowing, improper collection, abnormally high-interest rates, and privacy violations have become prominent.”
Since then, new rules have been introduced forbidding unlicensed organisations and individuals from conducting a lending business. Nonetheless, local media reports suggest that the problem is still rife on social media.
UPDATE 29/11/18: This story has been updated to include additional sources.