Predatory debt collectors hustling on borrowed time

Debt-collecting businesses are to be banned in Vietnam as part of local government action to protect customers’ rights, with the upsurge of predatory lending services triggering heated debate and eroding public trust.

1498p23 predatory debt collectors hustling on borrowed time
Aggressive debt collectors will soon have no room to operate in Vietnam

The National Assembly has approved the newly-amended Law on Investment, with a ban on the controversial debt collection business. Debt companies are those that specialise in collecting debts where the original creditors could not get arrears repaid.

There are currently 217 debt collection companies in Vietnam, mainly in Hanoi and Ho Chi Minh City, scrambling to grab their piece of the bad debt market, according to the Ministry of Planning and Investment.

Collecting debts is an important credit mechanism, but lately it has been rocked by a series of scandals, sparking public anger and warranting tighter official scrutiny.

According to Lieutenant General Doan Duy Khuong, director of Hanoi Department of Public Security, predatory loans are to blame for a rise in illegal debt collection activities. Abusive or predatory lending – whether undertaken by creditors, mortgage brokers, or home improvement contractors – may involve fraud or deception, manipulating borrowers through aggressive sales tactics, or taking unfair advantage of a borrower’s lack of understanding about loan terms.

The presence of illegal, predatory lenders hurts the legitimate lending services as a whole by eroding consumer confidence and increasing public distrust.

“Many of the tactics include threats of violence or threats against debtors’ families. In other cases, debt collectors can adopt more extreme approaches such as undue harassment, misuse of debtors’ personal data, defaming victims, or imposing extremely high rates on late payments,” said Khuong.

Senior Lieutenant Colonel Nguyen Dang Nam, head of the Criminal Police Division under Ho Chi Minh City Department of Public Security, cautioned that 99 per cent of debt collection companies in the area are allegedly showing signs of colluding with criminal gangs, using illegal tactics to collect inflated debts.

Local authorities, on the other hand, struggle in handling debt collection services, since the victims might be afraid to report issues.

“Vietnamese authorities should definitely bring a heavy regulatory hand down on so-called loan shark activities and criminal debt collectors to protect consumers’ rights,” Truong Thanh Duc, chairman at BASICO told VIR. “However, I’m afraid in case debt collection agencies are completely forbidden, it would adversely impact lenders as reclaiming debt would become a daunting task.”

“The COVID-19 pandemic has dealt a fresh blow to the whole economy. With no earnings coming in, debtors will likely default on their loans and they will turn to short-term, high interest loans. Undoubtedly, this will put many consumers at the mercy of unscrupulous lenders and debt collectors,” said Duc.

Other experts also agreed there is no need for debt collection as a kind of business, as disputes over payment should be resolved through negotiation or legal action. The state also has a full legal system, law enforcement, and enforcement agencies such as courts, prosecutors, and executors of sentences to serve such purposes.

 

Earlier this month, Ho Chi Minh City Department of Public Security held a probe into a string of peer-to-peer (P2P) lending firms, including two companies operated by Singapore-backed firm Cashwagon for charging at exorbitant lending rates. Dossier reviewing and loan procedures are processed and approved via its website or app, with lending rates at least double that of commercial bank rates.

The company has had more than 280,000 customers in Vietnam, and disbursed $100 million. In Indonesia, there are more than 310,000 customers with a total loan of $105 million. Cashwagon also secures a large base of customers across Southeast Asia.

Local media reported more than 7,600 loan-related crimes recorded in Vietnam in the last four years. Just over 50 were murder cases, while the others involved intentionally inflicting injury, robberies, and seizing properties and assets using force, fraud, or other scams.

Payday loans or cash loans are offered by lending platforms directly to borrowers under the name of credit loans or consumer loans. Approval times are relatively short, with simpler procedures so that debtors can expect to have their money in a short time.

Specifically, their customers tend to consist of subprime borrowers or low-income workers, who are among the most vulnerable people.

On the other hand, the collapse of a number of Chinese P2P lending services, even high-profile names, has sparked grievances not only in China but also in Vietnam.

In May, local media reported more than 60,000 people across Vietnam had to suffer cutthroat interest rates of over 1,000 per cent per year from a payday loan ring headed by Chinese nationals. The total loan amount reached VND100 billion ($4.2 million). The payday loan shark ran three companies (Vinfin, Beta, and Dai Phat) providing cash loans via apps Vaytocdo, Moreloan, and VD Online.

Besides that, a string of online lending apps such as Panda, Lightning Bolt, ATM Loans, Uvay, Bagang, and Vaydi are still catching the eyes of Vietnamese citizens.

Nguyen Hoa Binh, chairman of NextTech Group, expressed his concern that many online lending apps, which are owned by Chinese, have created unfair competition by using deceptive advertisements to lure more customers then charging them with sky-high lending rates of up to 90-100 per cent per month. VIR

Celine Luu

Member of biggest loan shark ring arrested

Member of biggest loan shark ring arrested

Police in the central province of Thanh Hoa, in co-ordination with HCM City police, have arrested a member of a loan shark ring in HCM City after being wanted for two years.

Five people arrested in HCM City loan shark apps bust worth $4.2 million

Five people arrested in HCM City loan shark apps bust worth $4.2 million

HCM City Police have broken up a payday loan ring headed by Chinese nationals, with some 60,000 debtors suffering cutthroat interest rates of 1,095 per cent per year.

 
 

Other News

.
Proper mechanism needed to export farm produce by sea to China
Proper mechanism needed to export farm produce by sea to China
BUSINESSicon  15/01/2022 

The Ministry of Agriculture and Rural Development and the Ministry of Transport recently co-hosted a conference on promoting the export of agricultural products through maritime transport as a way of devising a proper mechanism for farm exports.

Hanoi to establish 2-5 new industrial parks by 2025
Hanoi to establish 2-5 new industrial parks by 2025
BUSINESSicon  15/01/2022 

The Hanoi government has approved a plan to establish an additional two to five new industrial parks (IPs) in the 2021-2025 period.

What’s behind Tan Hoang Minh’s sky-high bidding price?
What’s behind Tan Hoang Minh’s sky-high bidding price?
BUSINESSicon  15/01/2022 

Tan Hoang Minh won the bid in a ‘duel’ to buy the 3-12 land plot in Thu Thiem new urban area in HCM City, but finally gave up.

Vietnamese FDI attraction likely to hit US$40 billion this year
Vietnamese FDI attraction likely to hit US$40 billion this year
BUSINESSicon  15/01/2022 

Amid rapid economic recovery following the COVID-19 pandemic, Vietnam’s foreign direct investment (FDI) attraction this year is anticipated to record positive signs and hit US$40 billion, according to insiders.

Agriculture Ministry denies that cross-border exports are low-quality products
Agriculture Ministry denies that cross-border exports are low-quality products
BUSINESSicon  15/01/2022 

Vietnam exported $3.52 billion worth of vegetables and fruits in 2021, an increase of 8.6 percent over the year before. China remains the biggest client consuming 54.5 percent of the exports.

Online shoppers warned of cunning tricks
Online shoppers warned of cunning tricks
BUSINESSicon  15/01/2022 

Along with the popularity of online shopping in Vietnam come several cunning tricks of criminals to steal money from consumers. 

Vietnam to be Asia's next startup hub
Vietnam to be Asia's next startup hub
BUSINESSicon  14/01/2022 

In an interview with Bloomberg recently, Binh Tran - co-founder of Ascend Vietnam Ventures - said that Vietnam's nascent start-up sector is developing and Vietnam is becoming the next technology hub of Southeast Asia.

Police ask for documents of 11 Hanoi-based projects of Tan Hoang Minh Group
Police ask for documents of 11 Hanoi-based projects of Tan Hoang Minh Group
BUSINESSicon  14/01/2022 

The Police Agency for Investigation of Crimes on Corruption, Economy and Smuggling (C03) of the Ministry of Public Security has asked the Hanoi People's Committee to provide documents related to projects based in Hanoi of the Tan Hoang Minh Group.

US$15 billion bailout package a stimulus to economic recovery
US$15 billion bailout package a stimulus to economic recovery
BUSINESSicon  15/01/2022 

Given the severe impact of COVID-19, the National Assembly’s recent approval of a VND350 trillion (US$15 billion) economic recovery package is considered by businesses and experts as an extremely important leverage and motivation moving forward.

HAGL sells over 48 million shares to pay debts
HAGL sells over 48 million shares to pay debts
BUSINESSicon  14/01/2022 

Hoang Anh Gia Lai Joint Stock Company will sell more than 48.1 million shares of its subsidiary HAGL Agrico (HNG) from January 17 to February 15 to pay debt.

Lang Son to stop receiving fresh fruit vehicles from Jan 17 to Tet
Lang Son to stop receiving fresh fruit vehicles from Jan 17 to Tet
BUSINESSicon  14/01/2022 

The northern province of Lang Son has announced that it would stop allowing vehicles transporting fresh fruits to its border gates for export to China from January 17 until the lunar New Year holiday or Tet.

VIETNAM BUSINESS NEWS JANUARY 14
VIETNAM BUSINESS NEWS JANUARY 14
BUSINESSicon  14/01/2022 

Cashless payments account for over 70 percent of retail transactions in 2021

Stock market sets new record on billion dollars of capital inflow
Stock market sets new record on billion dollars of capital inflow
BUSINESSicon  14/01/2022 

The Vietnamese stock market continued to reach another historic record, with the largest number of new accounts opened in December after 21 years of operation.

WB forecasts Vietnam’s growth at 5.5 percent in 2022
WB forecasts Vietnam’s growth at 5.5 percent in 2022
BUSINESSicon  14/01/2022 

The World Bank (WB) has forecast that Vietnam’s economic recovery is likely to accelerate in 2022 as GDP growth is expected to rise to 5.5 percent from 2.6 percent in the year just ended.

Vietnam reconsiders electricity sources after making international energy commitments
Vietnam reconsiders electricity sources after making international energy commitments
FEATUREicon  14/01/2022 

Vietnam’s commitments at 26th United Nations Climate Change Conference of the Parties (COP 26) will have a big impact on the country’s energy system. 

Vietnam’s economic growth forecast to rebound strongly in 2022
Vietnam’s economic growth forecast to rebound strongly in 2022
BUSINESSicon  13/01/2022 

Some foreign financial organisations have issued relatively positive predictions for Vietnam’s economy this year, with growth expected at 6.5 - 6.7 percent.

Three factors behind FDI attraction in Vietnam
Three factors behind FDI attraction in Vietnam
BUSINESSicon  13/01/2022 

Low labour costs, a geographical location close to Asian supply chains, and Japan and the Republic of Korea (RoK)'s efforts to promote greater overseas investment are considered as three factors in boosting Vietnamese foreign direct investment (FDI).

Live streaming attracts young people to earn money
Live streaming attracts young people to earn money
BUSINESSicon  13/01/2022 

Making money on online platforms and social networks is increasingly popular in the labor market, streamer jobs have become popular keywords for many young people.

Ample room for Vietnam's aviation investment
Ample room for Vietnam's aviation investment
BUSINESSicon  16/01/2022 

Private investors will have more options to invest in aviation infrastructure, which has been dominated by state-owned enterprises. 

Power Development Plan VIII under revision again
Power Development Plan VIII under revision again
BUSINESSicon  13/01/2022 

The draft Power Development Plan VIII is being revised again and expected to be submitted to the Prime Minister for approval in the first quarter of 2022.

 
 
 
Leave your comment on an article

OR QUICK LOGIN