Lenders are turning to coercive loan apps that shut down smartphones
restofworld.org
restofworld.org
In Africa, many electrical utilities were failing to get consumers to pay on time electrical bills. That when we started implementing prepaid electricity meters: you estimate how much you will consume over the course of a month, you buy those kWh on a monthly basis. If they finish, the light goes out automatically.
Electrical utilities are now less dependent on the goodwill of the consumer to pay bills. And here in many african countries, there is no simple way to track a person in order to make him repay a debt.
Imagine peoples buying nice Samsung phones on a loan ( ex $560/phone is huge), how do you track them in order to get back your loan? Some hikes the price of calls and SMS, some do other things and finally other install a kill switch.
These are a really old idea, there were coin operated electricity meters in the UK many years ago, in the 'everything is analog' era.
https://www.google.com/search?q=uk+electricity+meter+coin&cl...
It got so full over lockdown he had to whack it to fit more pound coins in. Also, every now and then he moans about finding enough coins in this day and age.
I think most of those sort of meters are now prepay cards in the uk, but the coin ones still exist.
Modern prepay meters in the UK can be topped up from your phone, or by entering a code if it fails to reach the meter.
Your friend should see if they're are to get a smart meter installed, it should be free though not all suppliers install smart prepay meters AFAIK
Although some older models don't have this
Ref https://help.bulb.co.uk/hc/en-us/articles/360019836271-If-yo...
Lending money to people and then strangulating them when they don’t pay is the way the mob works.
Side Note: That's the key reason you can't get your Ferrari easily insured with major car insurers... It is not impossible, of course, but it isn't as easy as with usual brands.
This needs to be limited, otherwise it becomes predatory, people who miss one payment are immediately sucked into an inescapable vortex of ever increasing debt, because they can’t pay the interest so the debt can only grow.
You mean taking back the thing they aren’t paying for?
Can you live without electricity? Do you have any destiny apart from poverty without a mobile phone? It depends on the society these people are living in.
If you consider a phone to be non essential than enticing people to get one using a predatory loan scheme is bad. And if it is essential then you should make sure they can get and keep one, and predatory loans are not the solution for that.
Wealthy people typically get cheaper utilities with less hassle. People renting somewhere with a prepay meter don't have the same level of access (whether they make reliable payments, or not).
We might agree that it is reasonable to differentiate when it comes to private loans, but when it comes to utilities, this is pure discrimination.
Counterpoint: this is a brilliant way to reduce risks and offer honest customers lower rates.
The law will eat you alive (as it should) rather than the ignition interlock manufacturer. However, in India, the law is completely absent at best and an active tool of your enemies at its worst.
In this case, this guy was going to be unable to do his job until he called from a borrowed phone (people do this all the time, did it myself when I had to make a call there once and my phone was borked).
The guy in the story was going to die due to the phone not being able to dial if the following sequence occurred:
* He arrived to do work on the building
* He was unable to get the power shut off to the building before working
* He decided to work anyway
The actual worst case of anyone reasonable (yes, even in India¹) is "Oh no, I can't confirm power shut-off. I can't do this job. Oh, it's you the guy who hired me. Can you call the building super and have him shut off the power? I can talk to him on your phone if you'd like".
Then you decided that this scenario somehow translates to "Should someone die because they didn't pay back $40 on your phone?"
This really strains credulity.
¹ Yes, they're not working on live wires intentionally there. This isn't the '90s
You're evidently not even trying to have a real discussion here so don't expect me to keep trying beyond this.
There are vanishingly few in India where you will not have an instant substitute, since emergency calls aren't blocked. You really don't understand the market at all.
Also, I am not trying to have a discussion with you. I'm trying to get you to stop misinforming third parties so your stopping posting is a desired outcome. I am glad to hear that.
I don't really have a better suggestion, but as more and more people from non-Western countries establish an online presence, many things that used to be taken for granted will no longer be applicable.
"Everyone owns their own phone" is up there, along with "all names can be written in ASCII", "personal names always come first", "everyone has an address/a personal email account" and "everyone uses the Gregorian calendar".
Cries in Indian. :'(
I bang on about the idea of a MOOP - where our daily behaviour is monitored (by phones) and then can be used to improve our lives - from basic budgeting to helping us with communication styles and relationship advice (94% of husbands with marriages rated happy would stop now and not continue this argument. Press any key)
But to do that demands medical levels of trust around the behaviour data - a d that needs both law and culture to be relentlessly clear about the trust levels.
A leak of your argument rate with your kids should be seen as similar as a leak of your heart rate.
And because all these things are linked, perhaps your credit rating should be seen as protected as your medical records.
Anyway, this is a form of predatory lending - they cannot charge 1000% APR so charge it implicitly through the threat of losing a phone. Only the desperate will apply - which should be a very good reason for not giving the loan.
(Then again, perhaps putting the app out there is a good signal that the lender should go to jail immmediately and be banned from financial industry. )
They're putting this app on phones for a reason: people would just keep the phones without paying and it's impossible to retrieve them cost-efficiently. Most services stop working if you stop paying.
This is something about society's attitudes to protection of its citizens.
The short answer is I prefer Liberal to Libertarian. The long answer is probably a book length.
Now it's true that as rates go up, so do default rates, so the same people who would only default at a rate of 10% of the time if the lending rate was 8% are going to default at 15% of the time at a lending rate of 20%. That's the cold, hard, mathematical truth of how risk works -- those who are already safe bets are lent to at very low rates, but those in a precarious position are lent to at higher rates. No amount of hand-wringing or preaching from soapboxes is going to change the math.
Now this can be a strong argument in favor of locking the poor out of credit markets. The argument goes: if they have a history of poor decision making or inability to maintain stable incomes, then we can protect them from making a poor decision about a loan by removing the possibility of getting a loan. I think this argument has a lot of force, but it also catches people who had bad credit due to sheer bad luck, and not poor decision making, and it makes life a bit harder for them. Another cold, hard truth - often to help a majority you have to hurt a minority.
So we try another tack -- make those with good credit subsidize those with bad credit by forcing everyone to pay the same interest rate for a car. That is basically a law against credit analysis. Don't take things like payment history or income into account, every loan is made at 10%. Here the problem is that there are wealthy people who obviously pose little risk, and they will be able to borrow from other markets at a lower rate, and will exit the auto lending market, thus driving default rates up and the average interest rate up and again the net result is shutting down the entire auto-lending market rather than just keeping out those with bad credit.
For this lending business to work, we need the best credit analysis possible, and attempts at making credit analysis less accurate create dead weight costs for everyone.
Really this is an object lesson in an old economic dictum: don't mess with prices to stabilize incomes. If you want to help the poor, give them money. Don't try to regulate the prices the poor pay for things.
I suspect I am upset that debt has become the way people fill-in for low wages, lack of social support etc. And worse, in say the 1930s, debt was accessible to (some) poor via low cost housing loans (Savings and loans). This seems to have vanished as everyone is now a bank not a mutal.
Plus, it is very clear that there is a lot of the lending market actively searching out poor credit risk in order to get them to sign up - they have a win win - the law is on their side to force repayment, or the credit risk makes huge efforts to repay.
I don't want to adjust the price - but actively seeking out people who see debt as a simple fix ... knowing its going to hurt them. Yeah its a socially problematic activity. So as you say the solution seems to be - freeze the credit markets at some (arbitrary) level (of x % APR) and start ensuring there are decent wages and decent social safety nets.
You can see why price-fixing is so attractive
Yeah, that's the flip-side of extending credit. It used to be that houses were a smaller multiple of the average salary because only short term (e.g. 3-5 year) loans were available. Of course homeownership rates were lower. Then banks began offering 30 year mortgages and homeownership increased but house prices rocketed up and it became common for working people to carry 30 years of massive debt. Then downpayment requirements were weakened from 20% to 10% to 3.5%. Now you even have interest only loans.
So locking people out of certain credit markets, or banning certain lending instruments, certainly has an appeal. I wouldn't mind if the federal government stopped insuring home loans and student loans and we returned to 3-5 year loans for homes and maybe 1-2 year loans for autos. We should not be in the business of subsidizing all this household debt, and we should be discouraging it a bit.
On the other hand why should leverage be freely available to "the rich".
I am tempted to solve it on the demand side - I am willing to bet one major difference in money management is just daily awareness of total spend and wealth. Something like Mint for everyone might actually move the needle (it's kind of where the EU / UK open banking is headed)
I have no issue with requirements that loans conform to some standard the average person can understand, but saying “you can’t be trusted to determine if a loan is right for you” is too paternalistic.
To first accept the inherent inequality of capitalism and then also allow people to prey on less fortunate at the bottom is just wicked and evil.
That seem very shallow. On what basis would you ignore the rather obvious connection to the varying power of labour movements?
There are also other human costs. E.g having your conversation on WhatsApp etc. being cut off midway due to a late repayment.
I'd argue the weight of this falls more on the compliance methods & tactics used than the loan financing rate itself.
The idea of interacting with people whose actions are governed by some computer (from some profit-driven company, no less) is deeply unsettling to me and I hope this concept will never see the light of day as an actual tool. I married my wife, not some algorithm.
Data about us should be presumed protected at all times. Only if we allow its use for let's say well regulated research it will provide huge benefits. The obvious ones are medical (reactions to this drug and lifestyles) but just imagine the benefits of basic behaviour improvements on a scale of millions. More exercise, better relationship advice,
These systems will be automated, taking any last shimmer of empathy away and abstracting the owners from the renters via a faceless software layer.
If we are not careful we will end up with a software enabled split society of owners vs renters, where neither interacts with the other and the system is void of any humility or empathy.
That isn't something "the market" can protect against in my opinion, the market will optimize toward monetary efficiency and renters hold no power to influence it. You can't just "find another house" when all properties are owned by the same class enacting the same will.
It really stuck with me and resurfaces often.
https://www.cliffsnotes.com/literature/g/the-grapes-of-wrath...
I have to not-so-subtly remind them that their inflexible software is not my problem, and that I won't bear the cost of its shortfalls.
It reminds me of The Diamond Age ;-).
"What's the, uh, strategy for making sure people actually, you know, show up when they're supposed to show up?" Bud said. At this point the banker lost interest in the proceedings, straightened up, strolled around his desk, and sat down, staring out the window across the water toward Pudong and Shanghai. "That detail is not covered in the brochure," he said, "as most of our prospective customers do not share your diligent attention to detail insofar as that aspect of the arrangement is concerned."
He exhaled through his nose, like a man eager not to smell something, and adjusted his goatee one time. "The enforcement regime consists of three phases. We have pleasant names for them, of course, but you might think of them, respectively, as: one, a polite reminder; two, well in excess of your pain threshold; three, spectacularly fatal."
It doesn't even need to do that to cause problems. Most likely someone will decide that it should phone home to check the user is allowed access everytime you start the vehicle, and if it can't, well no driving for you today.
https://www.extremetech.com/extreme/306338-phone-app-rental-...
Renting is not even a factor. Tesla can and will locate, unlock, and back out of parking (possibly out of your property) your car remotely for the convenience of the repo man they send if you’re behind on payments. If they achieve FSD the car will probably just drive away as soon as it’s able to.
This whole practice is despicable. And extremely predatory on the uneducated masses. Wouldn't be too far-fetched to see shady companies buying this data and re-targeting the same customers with other dubious financial products and loans.
Lauded for being one of the most progressive countries in internet infrastructure & access, the government of India is sleeping on this if not outright colluding with these unscrupulous corporate scammers.
There is a lack of formal credit scores or collateral making it difficult to assess loan-worthiness. Combine that with the fact that a disabled phone is no good for the owner or the lender, there is a substantial risk involved. And interest rates are nothing but a measure of risk premium.
as for interest always bring predatory - like many things it's not so black and white. it's about moderation and regulation.
Interest cannot be done in moderation, we've seen those attempts countless times, yet it always gets out of control. It's not dissimilar with drinking. Some people may drink in moderation, but there will always be drunk driving and homicides and many other terrible things caused by drinking. No way around it with moderation.
but the answer can't be prohibition either can it? for drunk drivers, the consequences should be harsher no doubt. driving is a privilege not a right and should be recognized as such. but banning drinking alcohol altogether hasn't worked well in any society at large.
Nope :) I come from a society where when drinking was prohibited, people complied immediately. It was documented that the streets of Madinah were flooded with wine when the prohibition came down because everyone poured out their stashes.
Of course, there will always be a small minority who will refuse to abide, either due to temptation or stubbornness. However, the prohibition under Islam has proven to work very very well. It's fallicious thinking to apply the failure of ban that was instituted in the US and generalize to other cultures. Islam has prohibited intoxicants 1400 years ago, but many people don't seem to bring it up.
Edit: it seems people are downvoting our discussion.
We can have compassion for those that fail, hence why the US has some of the most relaxed and borrower favorable bankruptcy laws. People act as though bankruptcy is like suicide. It's not. You just aren't trusted with other people's money for 7 years. You can very easily keep your house if you have a good relationship with the bank (which happens more than you think). Banks hate foreclosure. They'd rather risk some missed payments here and there or refinance than foreclose.
The system isn't perfect. But outright decrying it because the precepts of old religions where people told us we shouldn't eat shellfish or pork for arbitrary reasons is no basis in rational policy making. Should we base our policy of slavery on Muhammad's opinion about having slaves as long as they aren't Muslim? Like c'mon...these theologies do not contain the end all be all to the way life works.
Under an atheistic materialistic world view, we can kill off the entire population of the earth and it's all the same. However, we're not animals. Actually, even animals don't do that.
> People need to step outside this fantasy world that everyone can be winners/successful.
That's not what we're saying. Islam never says that everyone is going to be equally financially successful. As a matter of fact, people with wealth are going to be accountable for how they gained their wealth, and where they spent it, it's a test. That's why the poor enter Heaven before the wealthy, because they have less to be accountable for.
Islam places barriers on exceedingly immoral and parasitic and destructive practices, like lending money with interest, fornication, drinking, etc., and everything else within those bounds is a fair game. That's why we witnessed the immense and unprecedented growth of a religion and population, reaching the Islamic Golden Age when the rules of Islam were generally being applied correctly (at least much better than today).
> We can have compassion for those that fail
If that's the argument, then Islam has even more compassion. Lend the needy money *without* interest, and give them charity (Zakat and Sadaqah), and more. We already know that there was a time in Iraq where there were no people left to take charity as people gave their Zakat and Sadaqah.
> Should we base our policy of slavery on Muhammad's (ﷺ) opinion about having slaves as long as they aren't Muslim
I think you have a misconception. Having or not having slaves under Islam has nothing to do with the religion of the slave.
> told us we shouldn't eat shellfish or pork for arbitrary reasons is no basis in rational policy making
We don't follow a religion because it tells us not to eat pork or shellfish. We don't determine the truth of a religion due to those same factors. It's the other way around, once it is determined that the religion is True, then we follow its rulings and teachings.
> Like c'mon...these theologies do not contain the end all be all to the way life works.
Depends on which theologies you're talking about. It's a fallacy to group all religions under one umbrella then toss them out altogether as equally false. Islam has proven to be a system that has brought up a culture out of nothing, and went on to give us the Islamic Golden Age, among many other beautiful things.
However, it's all based off of dogma that isn't flexible and understanding that all humans life a different life, experience different things, and engage life in a different way.
>> It's the other way around, once it is determined that the religion is True, then we follow its rulings and teachings.
The religion has not in any way shape, form, or scientifically been proven true so I don't know how you can throw this out there. In a rational argument way, neither scenario can be argued, so asserting your theology is the "True" path is outlandish to say the least.
>>Islam has proven to be a system that has brought up a culture out of nothing, and went on to give us the Islamic Golden Age, among many other beautiful things.
That golden age was during like the 10th century if I recall. Meanwhile the western world has trounced the islamic world in technology, artistry, manufacturing, and economics. All because Islamic culture is rooted in staunch conservative thought.
Maybe in Christianity it is, but this isn't the case in Islam.
> The religion has not in any way shape, form, or scientifically been proven true so I don't know how you can throw this out there.
It has been, in fact, proven. One of the more "interesting" (for lack of a better word) proofs that I've come across was an Oxford educated historian, who after studying the Quran, admitted that it contained too many detailed and nuanced information about the Christian and Jewish faiths, such that no person would have been able to acquire said knowledge from casual interactions with Jews and Christians - especially since there wasn't really any Christian presence worth noting in the Arabian peninsula. So what was his conclusion? That Makkah and Madinah and the Muslims as told in the Islamic history books were not in Hijaz (present day Saudi Arabia), but farther up north on the outskirts of Jerusalem! Of course, such nonsense conclusion is trivially disproven by many means.
There are many detailed prophecies that were foretold and took place exactly as told. We're not talking Nostradamus style vague prophecies here, but detailed events, such as the conquering of Constantinople, the length of the Caliphate after the passing of Muhammad ﷺ (30 years), after which it turned into kingdoms. The foretelling of Muhammad ﷺ to several of his companions (including Uthman, Ali, Ammar bin Yassir) that they will be martyred, and not die a normal death. Informing Khosrow II's messenger that Khosrow had died before the news arrived, the prophecy about Yemen, Egypt, and the Levant that they will be under Muslim rule. Informing Suraqah bin Malik that he will wear the bangles of Khosrow at a time when the former was non-Muslim and was chasing after Muhammad ﷺ to get a bounty[1]. The fact that AbuHurairah was seeking refuge in God that he would not live to see the year 60 Hijri. He was informed by Muhammad ﷺ what would happen, that's the year that Yazid became the leader, and God answered Abu Huraira's prayer and he died in the year 59 Hijri; and many more to list here.
Just because Christianity has failed to provide such proofs, does not automatically mean that another religion has as well. This is a fallacy.
The Golden age of Islam was from the 8th to the 14th centuries.
> Meanwhile the western world has trounced the islamic world in technology, artistry, manufacturing, and economics
I invite you to read world history especially post WWI and WWII to see how we're still living the effects of Western occupation. It's no excuse of course, but we cannot leave out such very important factors. Sykes-Picot alone has effects lasting to the present day, not to mention the occupation of Palestine by the British and giving it to the Zionists.
> All because Islamic culture is rooted in staunch conservative thought.
It's because of being rooted in incredibly strong bases that we can claim that Islam has been preserved. We can say with confidence that no other religion's texts or teachings have been preserved. The reason Muslim majority countries today are suffering is because they're not sticking to Islamic teachings. We know this for a fact, that when Muslims did follow the religion properly, we prospered and were a role model for the world to see. Until we go back, we're staying the way we are today.
our entire economy runs off lending and debt. get rid of it and you make the world worse for everyone.
Today's economy runs off of lending, yet people keep crying from the inequality and other messes we're in, and keep trying to patch them up without success, and that's because the root is rotten, so it will never be fixed. We can learn a few things from economies that didn't run off of lending. See: Islam, and read about the Islamic Golden Age. We already know that there was a time in Iraq where there were no people left to take charity because everyone was well off and honest. That would never happen in an economy based on lending.
They instructed me to leave the apartment keys on the kitchen table when I departure, and leave the door unlocked. "You see", the explained, "it's a smart house. We can control everything from our phones! The door, lights, stove tv -- everything!".
They were proud of how advanced they are (naive, as I said), while I was a bit freaked out they (or their kids) would play with stuff in the apartment during my stay.
The Datacultr app mentioned is a particularly barefaced example of efficiently extracting small amounts of money from many users through hardware control.
There's also the idea of (effectively) embedding loans in smart hardware so they follow whoever's actually trying to use it. (Also already thing with cars.)
Both techniques seem likely to have many other applications. Probably very unpleasant ones.
If a person engages in these manipulative tactics, they'd be called psychopaths. But for a faceless corporate entity it's of course totally fine.
Surveillance capitalism continues the war on it's users.
In some parts of the world they are the same thing
Data is being used as collateral in this case, so this model literally treats data as "property", which IMO is not a good way of thinking about data.
In automotive, "buy-here-pay-here" lots have been using tricky devices to disable and locate cars when payments are missed.
But applied to cars, this technology seems like an unalloyed good.
Just like offering your kneecap as a surety can allow people with limited traditional collateral get a loan, this technology broadens who can get loans. (Without the risk of physical injury.)
Despite that, I think it would have been cool for Zameer to appropriate this phone, pay absolutely zero part of the loan, and hack it to remove the DRM. I hope lots of people in India learn how to do this and make this scam go extinct, and make a handsome profit.
Even if you have a judgment against you, you have rights.
Oh yea, never liked the ignition lock either, or the boot.
Make companies go through the court system if they have a problem with you.
As it is customers are being teased into becoming reliant upon these phones before having the rug pulled from underneath them.
You're assuming the existence of a functioning court system where you can hope to get justice in a reasonable time frame. Given that this happened in India, that is a very bold assumption indeed.
You can 'borrow' airtime from the operator and pay it back (at a premium of course) when you next recharge.
"what are you talking about, I don't owe you anything!"
The door sighed deeply "Yes, but you acquired me from Mr. Joe Chip, who had run up quite a big outstanding bill with every door in the city. As part of a door led crackdown on financial crime Mr. Chip's comings and goings were relegated to a pay as you come and go basis, and you, as part of your purchase of this door from Mr. Chip (or perhaps Mr. Chips estate I don't have all the paperwork) will have to pay as you come and go as well. It's all in the contract"
"Oh yeah, well I got that contract right here!" Johnny was nothing if not organized, he pulled the eink contract out from a nearby cupboard.
At first it was difficult to find the relevant section, as the parts about regarding assumption of previous owner's debts were by default toggled shut and whoever had implemented the contract had decided to make the toggling element a very small dot that looked like it could be a speck of dust attached to the electronic paper. But finally after poking at the dot for some minutes he managed to toggle it, displaying the legalese hidden within, sure enough; payment to his door for opening and shutting constituted a mandatory fee.
"You discover I'm right," the door said. It sounded smug.
There are much worse places right here in this U-Stor-It. Only the big units like this one have their own doors. Most ofthem are accessed via a communal loading dock that leads to a maze of wide corrugated-steel hallways and freight elevators. These are slum housing, 5-by-lOs and 10-by-lOs where Yanoama tribespersons cook beans and parboil fistfuls of coca leaves over heaps of burning lottery tickets.
It is whispered that in the old days, when the U-Stor-It was actually used for its intended purpose (namely, providing cheap extra storage space to Californians with too many material goods), certain entrepreneurs came to the front office, rented out 1O-by-lOs using fake IDs, filled them up with steel drums full of toxic chemical waste, and then abandoned them, leaving the problem for the U-Stor-It Corporation to handle. According to these rumors, U-Stor-It just padlocked those units and wrote them off. Now, the immigrants claim,certain units remain haunted by this chemical specter. It is a story they tell their children, to keep them from trying to break into padlocked units.
This is a way of extending credit to the high-risk. Without a way of reducing that risk, the credit won't be extended, and they will be worse off overall.
What it does is encourage them to go for a phone they can't afford. They could buy a cheaper phone, a used one, save money, etc, instead. But showing off is better I guess
"Rim rental" repos are a booming business
Edit: even the article agrees with me: "For now, the phone remains unlocked... he doesn’t mind the surveillance app as long as he can keep using his phone. Anyway, he has his eyes on a new 5G phone"
I think perhaps you have misattributed the responsibility here. The thing that "makes" someone take out a loan is the loan customer.
They Dont want a cheaper or used money or even save money. They want the "full social status" of a new brand phone.
In my country and others having a brand new phone has higher social status than having money in the bank or a car sometimes.
They asked why it was possible (presumably asking because it isn't on iOS). I gave the accurate answer.
Maybe if you think it's negative when I'm just stating the facts... it's actually negative.
Sent from my (last) iPhone
HN discussion (17 days ago, 676 points, 302 comments): https://news.ycombinator.com/item?id=26310817
> It appears as though charges from Apple are special, and if your account is not 100% current, Apple will quickly take drastic action.
The only exception may be Samsung's Knoxguard in its newest iterations which requires the device to "phone home" to Samsung to unlock the bootloader.