China's banking and insurance regulator on Tuesday said consumers should beware of the excessive borrowing and hidden risks caused by internet platforms and hold a rational attitude.
Some online platforms unilaterally emphasize favorable conditions, such as low interest rates, interest-free loans and simple procedures, but there are often service charges and other costs, and the annualized interest rate of such products may be very high. They blur the actual cost of borrowing, infringe on consumers' right to know and mislead the consumers, the China Banking and Insurance Regulatory Commission (CBIRC) said in a notice.
These institutions excessively promote the concept of loan consumption and advanced enjoyment, which can induce unrestrained consumption, especially misleading people with weak financial knowledge and young people without a stable income. For example, some teenagers borrow money on internet platforms to raise funds and buy gifts for their favorite celebrities, which is blind consumption that comes with many hidden risks, the CBIRC said.
Meanwhile, these platforms excessively collect and misuse consumers' information and even share the information with other platforms, lending institutions and investors, which violates consumers' information security rights, the CBIRC said.
The CBIRC also warned that consumers should cultivate a rational consumption attitude, choose formal institutions and channels for financial services and enhance their awareness of personal information protection.
China is paying close attention to the supervision of online platforms and has rolled out financial regulatory requirements.
On December 27, Pan Gongsheng, deputy head of the central bank, called on internet companies to enhance transparency in their business transactions, avoid unfair competition and safeguard consumers' rights and interests in a talk with fintech company Ant Group.