Who are loan sharks?
As the name suggests, sharks are predatory creatures that feed on others. This is the reason why Ah Longs or Loan Sharks are associated with them as they prey on individuals with unfair practices and violent behaviour. Singapore loan shark harassment activities are still on the rise despite the introduction of the Moneylenders Act Singapore in 2008.
How to identify loan sharks
Legal lenders are registered under the Ministry of Law and regulated by the Moneylenders Act Singapore. Singapore loan shark harassment involves illegal activities used by loan sharks for debt collection.
1) Illegal advertisement methods
If you receive a loan offer via SMS, WhatsApp, email, and/or social media, chances are they are illegal money lenders in Singapore. The Ministry of Law has banned such outreach activities for legal money lenders, who can only advertise on their website or display banners at their office premises.
2) Not registered with (ROM)
The Registry of Moneylenders (ROM) oversees the registration of all licensed money lenders in Singapore. They ensure that only qualified personnel enters this industry via a stringent screening process.
3) Generous in the loan amount
They will offer a huge loan amount without checking your credit scores, monthly income, employment status, and proper identification documents.
4) Exorbitant interest rates
Illegal money lenders in Singapore will go to great lengths to victimise consumers. Legal lenders have to abide by these rules:
- Maximum interest rate is 4% per annum
- Maximum monthly late payment fee is $60
5) Non-existence of physical office
Illegal money lenders in Singapore operate remotely and do not have a registered address. All licensed money lenders in Singapore are required to invite their prospective clients to their physical office before giving out any loans.
6) Random processing fees
Licensed money lenders will charge a processing fee which is capped at 10% of the loan amount when you secure a loan. Loan sharks will impose extra fees indicating a faster approval process.
7) Abusive and violent behaviour
Illegal money lenders will turn to violence and abusive behaviour in most of the Singapore loan shark harassment cases. Legal money lenders, on the other hand, will act professionally and negotiate on revised payment schedules.
8) Unreliable loan contract
Licensed money lenders provide a comprehensive loan contract with the following information:
- Loan amount
- Repayment schedule with the loan tenure
- Interest rates
- All other fees
- Legal clauses in case of default payments
Loan sharks tend to issue a blank contract with only the loan amount in writing.
How to fight against loan shark harassment
1) Stop payment immediately
Once you realize that you are dealing with loan sharks, stop payments immediately. Just bear in mind that these are illegal money lenders impersonating legal ones.
2) Get assistance from social service organisations
Borrowers can turn to the social service agencies listed below for credit counselling:
- Credit Counselling Singapore
- Silver Lining Community Services
- One Hope Centre
- Association of Muslim Professionals
3) Report them to the relevant authorities – Police, ROM
The public can call the police X-Ah Long hotline at 1800-924-5664. Alternatively, a complaint can be lodged with the Registry of Moneylenders at 1800-225-5529 regarding any Singapore loan shark harassment.
4) Avoid replying to unsolicited messages
In the first instance, do not reply to any loan offers via SMS, WhatsApp, or a phone call. It’s better to be safe than sorry!
New tactics used by loan sharks
1) Fictitious food delivery order
This is the latest method used by illegal money lenders in Singapore to harass borrowers. They would place a massive food order online pretending to be the customer and demand repayment from them.
2) Social media
In July 2021, 166 people were arrested for their involvement in Singapore loan shark harassment activities. The Singapore Police Force advised the public not to respond to any unsolicited advertisements on social media platforms and report them as spam.
Protection from Harassment Act
If you are able to identify the loan sharks, you may apply for a Protection Order under the Protection from Harassment Act (Chap 256A) through a lawyer. In most cases, it’s tough since these loan sharks operate anonymously.
Moneylending Act Singapore
Under the Moneylenders Act Singapore, first-time offenders would be sentenced as follows:
- imprisonment term not exceeding 4 years
- fine between S$30,000 and S$300,000
· up to 6 strokes of the cane