This article originally appeared on VICE Australia.
Microloan systems have revolutionized 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 pay for it? Sign up to Afterpay and for a series of $10 monthly installments you could have that tub paid off in 60 years.
It’s the way of the future, and Chinese millennials are diving in headfirst. According to the latest research from financial technology company Ant Financial, 45 million of the 170 million people born after 1990 in China have an Ant Check Later microloan account. They’re not just using them to buy big ticket items like TVs and Teslas, either—some fintech companies are also letting people pay for small daily purchases like burgers on a long-term, monthly installment basis.
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 lot of Chinese millennials. Because it’s 2018, though, there’s also a dark side to the system. Sure, you can get a huge box of Oreos and pay it back in monthly installments of 41 cents over three years, or go jet ski-shopping with peanuts to your name. But first, you might have to send some nudes.
A number of dodgy lenders have realized 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 transactions are known in China as “naked loan services.”
In 2016, a total of ten 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 organizations and individuals from conducting a lending business. Nonetheless, local media reports suggest that the problem is still rife on social media.
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