The Central Bank introduces new measures to protect citizens from fraud when applying for online loans

Every year, the number of fraudulent schemes related to online loans through banking mobile apps increases in Uzbekistan. Fraudsters use social engineering methods and illegal digital technologies to apply for loans in the names of unsuspecting citizens, and then steal money from their bank cards via transfers.

According to the Central Bank, in the first nine months of 2024, there were 463 cases of fraud involving online loans, resulting in financial losses totaling approximately 15 billion soums. Recently, we reported on one such case where scammers tricked a cleaning worker into taking out online loans amounting to 180 million soums.

What is the Central Bank doing? The Central Bank of Uzbekistan, having studied the experience of developed countries such as the EU, Australia, Russia, the US, and Canada, decided to introduce a new temporary procedure to protect citizens from fraudsters. From November 1, 2024, to April 1, 2025, new rules will be in effect aimed at preventing suspicious operations with bank cards during the process of issuing online loans.

Key changes:

Biometric identification
All citizens applying for a loan through the bank’s mobile app will be required to undergo biometric identification. This is necessary to confirm the identity of the applicant and prevent cases where a loan is fraudulently applied for in someone else’s name.

Two-stage credit history check
After submitting an application, credit organizations will conduct a two-stage check of the citizen’s credit history in the credit bureau database. If it is found that the client has a negative credit history or too high a debt burden, multiple loans have been issued over a short period, and the debt burden has sharply increased, the loan may be denied or the loan amount reduced.

Restrictions on P2P transfers
For new clients receiving an online loan for the first time, restrictions will be imposed for the first 48 hours after the loan is issued on transferring credit funds to personal accounts, electronic wallets, mobile account top-ups, and currency exchange. To lift these restrictions, the client will need to confirm receipt of the loan and the absence of fraud through contact with the credit organization. This will be done as follows: within 48 hours, the client must call the phone numbers indicated in the SMS message sent by the credit organization and confirm that they received the loan without the influence of fraudsters. A representative of the credit organization will re-contact the client, verify the provided information, and conduct additional confirmation.

The aforementioned restrictions will not affect the ability to withdraw the credit funds or perform transactions such as paying for goods and services, which can be carried out without restrictions.

Loan contract termination
If, within 48 hours after the loan is issued, it is determined that the application was submitted under the influence of fraudsters or the client fails to pass the repeated verification, the loan agreement will be terminated, and the loan funds will be returned to the bank’s account.

The importance of the new measures These measures are aimed at preventing many fraudulent schemes and will help reduce financial losses among the population. The problem of online loans has become so acute that it affects not only the economy but also the social stability of the country. The introduction of mandatory biometric identification and two-stage credit application verification is an important step towards ensuring the safety of citizens and their finances.

The restrictions on P2P transfers will create an additional barrier for fraudsters trying to quickly withdraw money from other people’s accounts. The Central Bank has also ensured that these restrictions do not affect citizens’ ability to freely manage their funds: they will be able to pay for goods and services without any issues.

These innovations are designed to protect citizens and reduce fraud risks, though they may slightly complicate the process of obtaining loans. However, additional checks and verification are the price of security and protection against fraudsters. As a result, users will be more confident in the safety of their data and finances.

The Central Bank urges all credit organizations to comply with the new rules and inform clients about the introduction of biometric identification and other protective measures. It is important that citizens are aware of their rights and opportunities to protect themselves from fraudsters.

The article may contain inaccuracies as it is translated by AI. For more details, please refer to the Russian version of the article. If you notice any inaccuracies, you can send corrections via the Telegram bot: Uzvaibik_bot.