City police said the group has operated for six months, offering loans worth more than 100 billion VND (about 4.26 million US dollars) at 90 percent monthly interest to 60,000 borrowers through three applications: vaytocdo, Moreloan and VDonline.
Two Chinese nationals, Tu Long, 28, and Yuan Deng Hui, 29, are believed to have led the operation. The three alleged Vietnamese accomplices are Chu Ngoc Trinh, 25, Lam Cam Quyen, 30, and Lai The Hung, 26.
The municipal investigation agency acted after receiving reports of people who had borrowed money and were being threatened by gang members for late payments.
“The real leaders of the network are two people who live in China, Li and Miao. We haven’t caught them yet since they ran the network over the phone and the Internet,” police said.
According to the police, Li and Miao hired Tu Long and Yuan Dang Hui in April last year to set up financial companies in Saigon’s Binh Tan district. The team then launched and advertised the three listed loan apps on social media like Facebook and via street flyers, offering people quick and easy loans without much paperwork.
Tu Long and Yuan Dang Hui employed nearly 40 customer service employees who instructed borrowers on how to download the company’s apps to their phones. Customers had to provide personal information, including ID card information and bank account numbers; and agree to seven mandatory terms that allow the app to access phone directories.
Their goal was to obtain the phone numbers of the borrower’s relatives, colleagues, and friends to use later for debt collection.
Depending on the application, a client could borrow between VND1.5-3 million ($64-127), with service fees detected at the source.
In the Vaytocdo app, for example, for a loan of 1.7 million VND, the actual amount the customer receives is 1.4 million VND after charging 300,000 VND as a service fee. Within eight days, the borrower must repay VND 2.04 million, including principal and interest. The company would charge a late fee of VND 100,000 ($4.26) per day.
MoreLoan and VD Online provide loans worth VND1.5 million (customers get VND900,000 and pay VND600,000 in interest and service fees). After a week, borrowers must repay the full VND 1.5 million and will have to pay 2-5 percent daily interest for late payment.
Clients are told that if they make their first payment on time, they can get more loans in the future. The highest loan amount is VND3 million ($127).
Debt collectors called to remind borrowers as their payment date approached. They also threatened to call parents, spouses, other relatives and colleagues and ask them to pay the borrower’s debt.
The investigative agency determined that the interest rate charged on the loans amounted to 3 percent per day or 90 percent per month, 1,080 percent per year.
Debt collectors are paid a monthly salary of VND6 million (about $255).
The case is being investigated further, police said.