[Update: Opera’s Statement] Opera’s loan apps accused of engaging in predatory behavior and violating Google Play Store’s policies
The browser market sees heavy dominance from Google Chrome across the board, much to the detriment of other browsers and the underlying competition in the market. This dominance and the declining user base has forced several browser entities to explore alternative models of revenue. Opera, which has a browser market share of 2.28% as of December 2019 (down from its 3.13% share in December 2018), decided to venture into short-term personal lending through app-based solutions for Kenya, Nigeria, and India. A new report now alleges that some of these loan apps from Opera are engaging in predatory behavior, as well as being in violation of Google Play Store’s policies on Personal Loan apps.
As per a report from Hindenburg Research, an entity that claims to specialize in forensic financial research, Opera offers lending solutions through OKash and OPesa in Kenya, OPay in Nigeria, and CashBean in India. That by itself is not an issue. The problems begin with how these particular apps operate, as they reportedly engage in dishonest behavior to bait and switch users into predatory short term loans, directly violating the Google Play Store’s policies on loan apps.
Back in August 2019, Google introduced new rules for apps that can be listed on the Play Store, with a specific focus on apps that disburse personal loans. The gist of these changes was that Google was strengthening its stance on predatory loan apps by expressly disallowing apps that give out personal short duration (<61 days) loans.
We do not allow apps that promote personal loans which require repayment in full in 60 days or less from the date the loan is issued (we refer to these as “short-term personal loans”). This policy applies to apps which offer loans directly, lead generators, and those who connect consumers with third-party lenders.
Google did not disclose any reasons for the specific rule, but the logical rationale behind the move is presumed to be the rather exploitative nature of such short duration personal loans. They tend to prey upon people in crippling need, hide charges and expenses in their fine print, and often have very high annual interest rates that are disguised as monthly or weekly rates to bring down the number value for favorable (read: deceptive) marketing. These app listing rules safeguard the consumers/end-users, but also Google in the sense that the Play Store as a platform does not propagate such predatory practices.
According to the report, all four of these apps provide loans for durations ranging between 7 to 30 days, which is misleading users as the descriptions in the respective app listings mention that loan duration can range between 91 days to 365 days. The description thus claims that the apps are listed on the Play Store in accordance with Google’s listing policies, but the report claims that the actual services offered do not line up with such descriptions, based on the researchers’ own due diligence findings.
To make matters worse, the report claims that the apps also deceive customers with the interest rates that they charge users for these very short duration loans, as concluded through calculations based on Google Play disclosures, consultant testing, company emails, and user reviews.
The workings of these apps are also described as a 3-step pattern of “bait and switch”:
Additionally, we saw what appeared to be a 3-step pattern of ‘bait and switch’ on loan terms in each app:
First, the app description would lure in users with low rates and long loan length terms.
Second, once downloaded, the app would then suggest users apply for a loan, showing a slightly longer loan length and terms that suggest a higher interest rate.
Third, once the user inputs their personal information and applies, the apps then either deny the borrower or grant a short-term loan with sky-high rates.
All of these claims are followed by extensive screenshots of the apps, their Play Store listings, and claims of consultant testing. While we cannot independently verify all of these claims, we did notice that the Play Store listing for Cashbean has some peculiar behavior: The app is titled “Loan Instant Personal Loan App – CashBean“, using the word “loan” possibly for search keyword stuffing for favorable SEO, its package name is obnoxiously long “com.loan.cash.credit.easy.dhan.quick.udhaar.lend.game.jaldi.paisa.borrow.rupee.play.kredit” using several English and Hinglish keywords (and even a misspelling) possibly for keyword stuffing yet again, and the listing has an unusually large number (300+) of low-quality 5-star ratings and reviews all made today (and possibly many made earlier too). Just for reference, the CashBean app is published by P C Financial Services Private Limited, whose LinkedIn mentions that it is a 100% subsidiary of Opera. Opera only publishes its browsers through its Opera-branded Google Play developer account.
OPesa has since been removed from the Play Store, but the other three apps continue to be available for download. You can read the complete report at the source, as it contains a lot of information that is beyond the scope of this news article. One thing is clear though — Google certainly needs to take a look at the loan apps and decide whether they are in line with its Play Store listing policies.
Update: Opera’s Statement
Opera has issued a response to dispute the report, stating that it contains “numerous errors.” The full response can be seen at the company’s investors site and below.
The Company is aware of and has carefully reviewed the report published by the short seller on January 16, 2020. The Company believes that the report contains numerous errors, unsubstantiated statements, and misleading conclusions and interpretations regarding the business of and events relating to the Company.
The Company has recently launched and scaled multiple new businesses and has continued to post strong financial results, and intends to continue leveraging its well-known brand and large user base of more than 350 million users for additional growth. The Company also remains committed to maintaining high standards of corporate governance and constantly evolving our products, practices and governance.
Via: Android Police