Police Raid Listed Credit Platform Over Shady Debt Collection Practices
Authorities have accused a prominent online credit platform targeting young people of contracting debt collectors that harassed and intimidated borrowers and even impersonated government employees.
Police on Monday raided the Hangzhou office of Hong Kong-listed online credit card management platform 51 Credit Card Inc., in part of a wider clampdown on companies that illegally gather personal information online, a process known as illegal data scraping, and use it to facilitate debt collection.
Police in Zhejiang province capital said in a Monday post (link in Chinese) that they took action after receiving a large number of complaints about the company, including that its contracted debt collectors had pretended to work for the government.
Sun Haitao, 51 Credit Card CEO, issued an apology (link in Chinese) on Weibo on Tuesday morning, blaming poor management, including insufficient training and supervision of partnering companies, which he said led to “extreme behavior” that “harmed some borrowers.”
But it’s not the first time the company has been linked to personal data theft and other shady practices. In July, 51 Renpin, an online lending platform operated by the firm, was criticized by the Ministry of Industry and Information Technology for secretly collecting personal information.
On a third-party complaint platform, 51 Renpin users warned of malicious debt collection methods that included exposing users’ contacts and harassing their families and friends.
Sun and 51 Credit Card Chief Financial Officer Zhao Ke assisted the investigation, the firm said in a Tuesday filing to the Hong Kong Stock Exchange. The company said the investigation that required assistance from the two had been “temporarily completed” and that neither man had been detained by authorities.
Shares of 51 Credit Card plunged nearly 35% on Monday morning, and the company halted trading of its shares in the afternoon. The company resumed trading on Tuesday afternoon, recovering almost 13% by close.
Founded in 2012, 51 Credit Card started as a credit card bill management app and later began extending credit to consumers. In its 2019 interim report, the company said its users are mainly young consumers with credit cards. “They are willing to use consumer finance products, and they have both strong consumption needs and abilities.”
In the first half of this year, the company booked 1.4 billion yuan ($200 million) in revenue, up 9.8% year-on-year, with about 57.4% contributed by credit facilitation and service fees. The company’s overall credit facilitation business expanded 6.5% year-on-year to 13.8 billion yuan in the first of the year, the report showed.
Regulatory authorities in China’s other regions are also taking action. A local financial watchdog in Beijing has requested big data companies in the municipality check and report if their businesses involve illegal data scraping, Caixin has learned.
Contact reporter Timmy Shen (email@example.com, Twitter: @timmyhmshen), editor Flynn Murphy (firstname.lastname@example.org)
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