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Pandemic Gives Loan Sharks More Prey


“Noradhiah” and “Shahirah” listen and watch the Muslim Consumer Association Malaysia hold a phone call to start a negotiation with a loan shark’s henchman. (Dave Grunebaum/VOA)

Business partners “Noradhiah” and “Shahirah,” who asked that their real names and the type of small business they own not be disclosed, sit nervously, fidgeting in their chairs, as the phone call gets underway.

They listen and watch as a case manager for the Muslim Consumer Association Malaysia talks with a loan shark’s henchman.

The case manager tells the henchman that they’re going to negotiate a deal that will bring a close to all business between the loan shark and Noradhiah and Shahirah

The henchman says they owe the equivalent of nearly $1,000.

“Noradhiah” and “Shahirah” say they were tricked into thinking they were borrowing from a licensed money lender but found themselves caught in an on-going debt trap.
“Noradhiah” and “Shahirah” say they were tricked into thinking they were borrowing from a licensed money lender but found themselves caught in an on-going debt trap.

Their troubles started several months before, when they borrowed the equivalent of about $4,000 from someone they were tricked into thinking was a licensed money lender.

They said they’ve since paid back more than double what they borrowed, and when they tried to stop paying, the henchman hinted at vandalizing their homes.

It has all taken a heavy toll on these women financially and psychologically.

“Lost sleep, lost appetite, always worried and I even lost weight,” Shahirah said.

The Muslim Consumer Association Malaysia, a nongovernment organization, said for the past year it has been getting about 25 new cases each day of loan shark victims asking for help. That’s a 30% increase compared with before the pandemic.

“It’s a situation of desperation. A situation of frustration,” Nadzim Johan, the chairman of the Muslim Consumer Association Malaysia, said.

Noradhiah and Shahirah said their business, like so many others, has been struggling since the start of the pandemic and the ensuing economic crisis.

They needed to borrow to buy necessary equipment to pick up a new client. They said they approached several banks before turning to a moneylender but couldn’t get an answer quickly enough.

“We were afraid that if we didn’t come up with the money to buy the materials very soon we would lose the client,” Shahirah said. “So we turned to someone we thought was a licensed moneylender but it turns out he was a loan shark.”

Many Malaysian businesses have closed down because of the economic impact of COVID-19. (Dave Grunebaum/VOA)
Many Malaysian businesses have closed down because of the economic impact of COVID-19. (Dave Grunebaum/VOA)

The Muslim Consumer Association Malaysia said stories like this are all too common because loan sharks often claim to be licensed moneylenders and appear very professional with new clients.

However, the consumer association said there are also many people who know they’re dealing with a loan shark but still go forward with it.

“Sometimes they want the money to sustain their business rather than close down,” Nadzim Johan said. “Other times they don’t want to admit to their families that they’ve fallen on hard financial times and want to maintain their lifestyles rather than cut back on expenses.”

Nadzim Johan chairs the Muslim Consumer Association Malaysia. The non-government organization says the number of loan shark victims asking it for help has gone up 30% compared to before the pandemic. (Dave Grunebaum/VOA)
Nadzim Johan chairs the Muslim Consumer Association Malaysia. The non-government organization says the number of loan shark victims asking it for help has gone up 30% compared to before the pandemic. (Dave Grunebaum/VOA)

The Muslim Consumer Association Malaysia said the borrowers come from all income levels and the loans can range from less than $100 to more than $1 million.

The interest rates might be less than 10% per month at first but there might be hidden fees or terms buried in the fine print that quickly kick the interest up to 10% per week or more plus surcharges.

When victims refuse to keep paying, the loan sharks sometimes resort to vandalizing homes or cars and even sending thugs to beat people up.

“They use fear to collect, to pressure as much as possible so that they can earn as much as possible,” Nadzim Johan said.

Noradhiah and Shahirah turned to the Muslim Consumer Association Malaysia for help because they knew they were in a debt trap they were desperate to break free from.

“No matter how much we give them it won’t be enough they will ask for more and more.” Shahirah said. “They will calculate and just plot some figure and ask us to pay them.”

The Muslim Consumer Association Malaysia said it usually persuades the loan sharks to accept 25% to 50% of what they’re asking for and close the deal.

WATCH: Swimming with 'sharks'

Pandemic Gives Loan Sharks More Prey
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In the case of Noradhiah and Shahirah they were able to end their nightmare by paying about $250 instead of $1,000.

They both acknowledge they should’ve taken more steps to make sure they were borrowing from a legitimate business.

It’s a lesson they and so many others learn the hard way.

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