Wu Guangqiang

    jw368@163.com

    THE very mention of loan sharks would remind us of Shylock, the greedy and ruthless Jewish moneylender in William Shakespeare’s play “The Merchant of Venice.” He demands a pound of flesh from his Christian rival, Antonio, who defaults on a loan from him. This notorious plot has become a trademark for all those merciless moneylenders who rip off borrowers by hook or by crook.

    Now the flesh-for-debt scenario has a modern version, which may not be that cruel, yet equally ugly. Loan sharks also appear under a new coat: P2P (peer-to-peer) lending, the practice of lending money to individuals or businesses through online services that match lenders directly with borrowers.

    A recent case involving P2P lenders blackmailing college girls has shocked the public: a large number of nude photos of over 1,000 female university students were posted online by loan sharks.

    People may wonder how these photos fell into the hands of the loan sharks. One of the girls surnamed Li told media how she got trapped. She borrowed just 500 yuan (US$72) from an online financing company in order to start a small business in February last year.

    The creditors asked no questions about what she wanted to do with the money, and they gave only one condition: she was to send nude photos of herself holding her identification card as acknowledgment of her debt.

    If her debt was not repaid within the specified time limit, the creditors threatened to publish the photos online and send them to her parents.

    Li claimed that she was unable to repay the money in time, and with a weekly interest rate of 30 percent, Li’s 500-yuan loan snowballed and she ended up owing as much as 55,000 yuan.

    Having failed to meet her creditors’ demands, the photos eventually ended up online. Li’s parents also received messages showing their daughter in the nude.

    Amid the rapid growth of the Internet finance industry in China, particularly P2P lending, in recent years, many small businesses and individuals who have previously had no access to loan services now find it possible to obtain the funds they needed so badly. As P2P companies offering these services operate entirely online with lower overhead than traditional financial institutions, in theory, borrowers can get loans at lower interest rates and through simpler procedures, which lures in many people who struggle to pay off debt.

    Yet the nature of P2P lending, namely, hard-to-regulate, has made it a tool for many con artists, and the media has been abuzz with reports of fraudulent cases involving P2P companies.

    As of April 2016, 1,557 lending sites of the 3,984 in total were found to be problematic, and some of them have closed down after failing to pay back lenders.

    One of the most notorious cases concerned Easy Richness, a P2P lending firm based in East China’s Jiangsu Province. Last April, it declared that it was unable to pay back investors because its bank accounts had been frozen by authorities during an investigation into the company for allegedly taking deposits illegally.

    Also in last April, police raided Shanghai-based Zhongjin Capital Management, which had drawn 34 billion yuan in investment, for allegedly accepting public deposits and committing fraud, with multiple employees arrested, including the owner.

    University students are the most vulnerable victims because of their lack of experience and awareness.

    There is a great variety of P2P lending services tailored for students, most of which come with attractive terms. Many students even act as business promoters.

    As a result, many young students became a debtor for the first time and some of them have ended up deep in debt. As Xiao, a sophomore in Shenzhen, put it, “It’s cool to spend freely with just a press of the finger.” He spent 6,000 yuan on last year’s 11/11 Singles’ Day. His parents paid off his debt.

    Some were not so lucky. A student owed 30,000 yuan and was unable to repay it, and he ran away from home after a quarrel with his parents. A college student in Henan Province killed himself for failing to pay back his 600,000-yuan debt.

    Immediate measures must be taken to protect students from the harassment of loan sharks.

    (The author is an English tutor and freelance writer.)