KUALA LUMPUR: The phone rings, showing an unlisted number. Afiza (not her real name) does not pick up her phone. The phone falls silent, only to ring again after a few minutes.
The likely caller is "John”, a loan shark or Ah Long who loaned her RM10,000 to ease her Covid-19-related financial problems.
She told Bernama she has been receiving more than 10 calls and messages a day.
The 28-year-old mother-of-two was harassed, threatened and shamed earlier when she could not repay her loan on time. When she finally paid off her debt, she thought it was over. But the calls continued.
Unlicensed moneylenders have always been around, popular among the poor and rich who are desperate for some quick cash.
But with the pandemic and rising cost of living, coupled with the easy reach of social media, business has been booming for Ah Longs.
Afiza is among the estimated thousands of Malaysians who are believed to have turned to unlicensed moneylenders for funds before and after Covid-19 shut down the world in March 2020.
Non-governmental organisations (NGOs) such as the Muslim Consumer Association Malaysia reported in 2021 that they had been receiving about 25 new cases each day of loan shark victims asking for help, a 30% increase compared with before the pandemic.
From January to April 30, 2022, police investigated 324 cases related to loan sharks, detained 543 and charged 159 in court. Most cases, however, go unreported.
Predatory but funds come fast
These unlicensed moneylenders are operating illegally - under Section 5(2) of the Moneylenders Act 1951, anyone lending money without a valid licence can be fined RM250,000 to RM1mil or face a jail term of up to five years or both upon conviction.
But the ease of getting a loan from an Ah Long, compared to banks and other official financial institutions which often take a while to decide on a loan application and require a lot of documentation, is a strong lure.
For those who do not have much time, collateral or have a poor credit score, the money loan sharks are willing to lend without much fuss can be the difference between a hawker being able to earn an income - such as buying bananas to make and sell fritters (pisang goreng) - and earning nothing.
"You can never get rid of loan sharks,” said a former loan shark, who asked to be identified as Guy, likening moneylending to a service.
Finance expert Felix Neoh from Finwealth Management agreed that these loans are an alternative rescue plan for many households in dire straits.
He said the desperation many felt, along with the speed and ease in getting the loans, outweighed any concern they had about borrowing money from unlicensed and unregulated moneylenders.
He warned since illegal moneylenders are not governed by any regulation or guideline, such arrangements usually come with strings attached.
"Given that these loans are provided to borrowers without collateral and minimal supporting documentation, the interest (rate charged) is expectedly high. This can escalate astronomically should non-payment or late payment occur during the repayment period,” he said.
Guy described being a loan shark as very profitable. The 38-year-old man worked for Ah Long from 2016 to 2018 before operating his own unlicensed moneylending business from 2019 to 2021.
He told Bernama some of the things he used to do was lend money at 20% to 50% interest rates, require fast repayment of the loan and increase the interest rate if the debtor could not pay the sum.
His services ranged from providing small loans to hawkers and small business owners to lending large sums to more affluent people.
"I once lent RM2mil but it was to a somebody, a 'Datuk'. He paid back but by the time he paid back, it was RM5,6mil already,” he said.
If someone could not repay, he said he would then resort to calling and sending messages to the debtor, reminding them to pay him back.
Sometimes these reminders would take place publicly, such as posting flyers with the person’s identity card details and telling everyone they had not paid back the money they had borrowed from a loan shark.
Guy added that when he was in the business or while he was working for other loan sharks, he did not resort to violence or destroying property, describing himself as more of a "talker”.
But, as an employee, he had referred difficult cases - that is, those who refused or could not pay - to the "enforcers”. According to news reports, some of the things they would do to force the debtors to pay up were splashing red paint on their homes and beating them up.
Guy also admitted six people he had loaned money to committed suicide because they could not repay their loans to him and other moneylenders.
Afiza shuddered, remembering those days when she failed to settle her second loan of RM10,000. She said that was when the trouble started.
"They threatened to burn my house, expose my details to the public, kill me or my husband, and the worst threat was to rape my one-year-old daughter,” she said.
She filed a police report and paid her debt. Now, on top of other loan offers, she is getting calls and messages from the moneylenders promising her that her family would be safe and that she would be paid RM2,000 if she withdrew her police report.
In the old days, moneylending offers were usually printed on flyers posted on public notice boards or pillars. Nowadays, they can also be found on social media, where most of their targets are.
Afiza told Bernama she saw an advertisement on Facebook, offering a loan package with no upfront fees and no documentation.
She went on the website and filled out her details, applying to borrow RM4,000 (which was the first loan she took from the moneylender). She was to repay this sum plus a hefty interest of 25% - the total amount came to RM5,000 - on the 30th day.
She also suspects the person she first borrowed money from shared her data with other moneylenders.
Guy described such advertisements as "practically scams” and the moneylenders as "fake Ah Long” as the websites and online forms give these moneylenders a veneer of legitimacy.
Cybersecurity expert Fong Choong Fook from LGMS Bhd was not surprised to hear how Afiza got her loan or that her personal information may have been shared with others.
"We have seen many of these advertisements appearing on social media platforms such as Facebook.
"Based on the personal data, they can look at our age, permanent residence, where the individual is (currently) staying, vehicle number and more details," he said.
Fong urged the government to work on tightening advertisements on social media platforms, and for social media companies to cooperate and increase protection for their users.
He also urged the public to be wary of illegal or unlicensed moneylending services online.
Meanwhile, Neoh suggested that the government increase availability and access to licensed lenders, as well as increase awareness of the consequences of getting involved with loan sharks.
"We (also) need to increase the financial literacy of the Malaysian public so that they become more aware of financial planning and personal finance in order to build a healthier financial lifestyle," he added.
As for Guy, who is trying to go straight, he said helping desperate people to get quick personal loans from licensed institutions would be a good move.
He said the government should also work on why people needed to go to loan sharks in the first place.
"In my experience, (loans for) emergency cases are only a few,” he said, adding that most of the loans people got from him were to service vices including gambling and prostitution. - Bernama