KUALA LUMPUR, MALAYSIA – Business partners “Noradhiah” and “Shahirah”, who have asked that their real names and the type of small business they own not be disclosed, sit nervously, waving in their chairs, so that the phone call begins.
They listen to and watch a case manager from the Malaysian Muslim Consumers Association speak with a henchman of a loan shark.
Case manager tells henchman they will negotiate a deal that will end all business between the loan shark and Noradhiah and Shahirah
The henchman says they owe the equivalent of almost $ 1,000.
Their problems started months ago when they borrowed the equivalent of about $ 4,000 from someone they believed to be a licensed money lender.
They said they had since paid back more than double what they had borrowed, and when they tried to stop paying the henchman hinted at the vandalism of their homes.
All of this took a heavy toll on these women financially and psychologically.
âLoss of sleep, loss of appetite, still worried and I even lost weight,â Shahirah said.
The Malaysian Muslim Consumers Association, a non-governmental organization, has said over the past year that it receives around 25 new cases of moneylender victims asking for help every day. That’s a 30% increase from before the pandemic.
âIt’s a situation of desperation. A situation of frustration, âsaid Nadzim Johan, president of the Muslim Consumer Association Malaysia.
Noradhiah and Shahirah said their business, like so many others, has been struggling since the onset of the pandemic and the economic crisis that followed.
They needed to borrow to buy the equipment needed to take on a new client. They said they approached several banks before turning to a lender, but couldn’t get a response quickly enough.
âWe were worried that if we couldn’t find the money to buy the materials very quickly, we would lose the customer,â Shahirah said. “So we turned to someone we thought was a licensed pawnshop, but it turns out he was a loan shark.”
The Malaysian Muslim Consumers Association said stories like this are all too common because loan sharks often claim to be approved lenders and appear very professional with new customers.
However, the Consumers Association said there are also a lot of people who know they are dealing with a loan shark but continue to do so.
âSometimes they want the money to support their business rather than shutting down,â Nadzim Johan said. “Other times, they don’t want to admit to their families that they have experienced financial difficulties and want to maintain their lifestyle rather than cut back on expenses.”
The Malaysian Muslim Consumers Association said borrowers come from all income levels and loans can range from under $ 100 to over $ 1 million.
Interest rates may be less than 10% per month at first, but there may be hidden charges or conditions buried in the fine print that quickly drive interest up to 10% per week or more, plus supplements.
When victims refuse to continue paying, loan sharks sometimes resort to vandalism of homes or cars and even sending thugs to beat people up.
âThey use fear to collect, to put pressure as much as possible so that they can win as much as possible,â said Nadzim Johan.
Noradhiah and Shahirah turned to the Malaysian Muslim Consumers Association for help as they knew they were in a debt trap that they desperately wanted 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 plot just a number and ask us to pay them.”
The Malaysian Muslim Consumers Association said it usually persuades loan sharks to take 25-50% of what they ask for and close the deal.
WATCH: Swimming with “sharks”
In the case of Noradhiah and Shahirah, they were able to end their nightmare by paying around $ 250 instead of $ 1,000.
They both admit that they should have taken more steps to ensure they were borrowing from a legitimate business.
It’s a lesson they and so many others are learning the hard way.