Illegal Online Lending Trap in Cambodia Exposed, Small Loans Turning into Huge Debts

A recent investigation revealed that illegal online lending in Cambodia continues to spread, with scammers using social media to attract borrowers and profit through high interest rates and unclear terms, impacting vulnerable groups.

Many borrowers initially take small loans of around $50, but due to excessive interest and hidden conditions, debts can quickly grow to over $2,000.

These lenders often promote “fast approval” and “no collateral” loans on social media and require personal data such as ID cards, photos, and contact information.

Some borrowers are even asked to record loan confirmation videos, which are later used to threaten or publicly shame them if they fail to repay on time.

Victims reported that their personal information was exposed online, affecting their jobs and daily lives, and some continued to face harassment even after repaying their debts.

In addition, some scammers impersonate licensed financial institutions, collect fees, and then disappear, leaving victims with financial losses and privacy risks.

Police warned that such cases have been increasing due to digital platforms, noting that illegal lending often involves both excessive interest and abusive collection practices.

Under Cambodian law, the maximum annual interest rate is 18%, and any contract exceeding this limit is illegal, yet some people still turn to these risky options due to urgent financial needs.

Experts said the issue has grown into a broader social problem, affecting not only personal finances but also family relationships and mental health.

Banking authorities also urged the public to borrow only from licensed institutions and avoid sharing personal data or transferring money to unknown sources.