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China's top banking and insurance regulator warned consumers of the risks and traps associated with excessive borrowing via online lending platforms on Tuesday.

To acquire a large number of clients, some online lending platforms are over marketing to consumers loans and certain types of financial products, which are similar to credit cards, through various types of scenarios for online consumption.

The China Banking and Insurance Regulatory Commission said some of these platforms put unbalanced stress on the advantages of such financial products, including low daily lending rates and interest-free periods. However, although some platforms claimed that they offer lending products at "zero interest rates", they actually charge service fees and late payment fees. As a result, the comprehensive annualized interest rates of these kinds of products may be really high.

By deliberately confusing "zero interest rates" with the real cost of borrowing through marketing, these online lending platforms are misleading consumers and infringing on their right to know, the regulator said in a risk warning notice on its website.

Some platforms propagated the idea of ahead-of-time consumption, which induced a lack of consumption restraint, especially among people lacking financial literacy and young people without a stable income.

Some platforms even overlent to minors, students and low-income groups, and engaged in abusive debt collection practices, which caused a series of family and social problems, the commission said.

"In my opinion, a consumer loan targeting college students is a poison. Some merchants and financial institutions spare no effort to encourage young people to spend lavishly — wearing brand-name clothes and inviting their friends for dinner at a nice restaurant — although their parents do not make much money. It is wrong to stimulate irrational consumption that they cannot afford," Liu Kegu, academic advising team leader for the inclusive finance commission at the China Association for the Promotion of Development Financing, said earlier.

The commission urged consumers to assess their own loan affordability correctly, avoid borrowing too much, and prevent excessive reliance on borrowing for consumption. Consumers also should have a good knowledge of the online lending products they applied for, the regulator said.