When his health supplement business struggled with cash-flow problems, Bobby Tan* turned to a so-called professional networking group in Hong Kong for help, borrowing HK$300,000 (US$38,220) from a licensed small lender in April last year.
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Over the next 10 months, the Hong Kong permanent resident from Southeast Asia continued to take on more debt, borrowing from 30 different licensed moneylenders for a total of HK$5.05 million.
Each lender charged him an illicit upfront “commission” of 15 to 30 per cent in addition to other expenses – effectively an interest rate of 1,031 per cent.
After deducting agents’ commissions, he only received HK$4.15 million in loans.
Having repaid more than HK$4.78 million, these lenders, who operate no differently from loan sharks, are still chasing Tan for HK$1.87 million.
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When Tan overborrowed and was living in fear of being chased back for unpaid loans in December last year, the agents persuaded him to use his wife’s name, Alicia*, to borrow more.