In Colombia, Loan Sharking is Now Just a Click Away

SHARETweet about this on TwitterShare on FacebookShare on LinkedIn

The longtime loan sharking tactic in Colombia known as “gota a gota” has entered the digital age — as mafias are now using mobile apps to hide money transfers, charge customers and threaten those who cannot pay.

The “gota a gota” tactic, or “drop by drop,” — named after the way in which victims are slowly bled dry of funds — consists of lending small sums of money at high interest rates to people who have trouble obtaining traditional loans. The cash often comes from illegal activities, including drug trafficking.

SEE ALSO: Colombia News and Profiles 

In the past, criminal groups have used store fronts to find customers and physical sheets to keep track of debts. But police say criminal groups have left behind this antiquated method in favor of mobile apps that make it much easier to reach and interact with their vulnerable clients, El Heraldo reported.

Authorities have long fought traditional “gota a gota” operations, and the digitization of this extortion method complicates that task by providing debt collectors a new and easy way to access, charge and keep track of their victims.

The applications record payment dates, new payments, interests, loan status and other details. In some cases, the applications even have access to debtors’ profiles and location. Providing such information puts debtors in a dangerous situation as they are often threatened, robbed, attacked or even killed when they cannot pay.

Meanwhile, authorities have found it difficult to combat the practice of “gota a gota,” because victims are often afraid to speak out.

InSight Crime Analysis

The ease of use of the new cellphone apps will provide new clients to mafias in the business of “gota a gota” loan sharking, which has proven to be particularly lucrative to criminal groups seeking ways to diversify revenue streams and launder money.

While “gota a gota” started in Colombia, it has since migrated to a number of countries in the region – Mexico, Peru and Chile. Even Costa Rica, which has managed to avoid some of the ills of its Central American neighbors, has seen these loans take off because of an influx of cash from drug trafficking.

What’s more, cellphone technology has greatly expanded extortion rackets throughout Latin America. A cheap phone and a few dollars’ worth of prepaid credit are the rudimentary tools to get in the game.

SEE ALSO: InDepth Coverage of Extortion

The “gota a gota” method, however, usually requires the backing mafias, which have the capital to get in the loan sharking business and the ability to track the cash. And the apps are easy to come by.

A search of app stores by InSight Crime found several of these apps available for free, some of which directly referred to “gota a gota loans” in their names.

What makes the use of these apps alarming is the amount of information clients must provide, including detailed personal information. This simply makes it easier for debt collectors to threaten victims. Why send armed thugs to debtors’ doorsteps when a simple WhatsApp message — with their exact location or that of their loved ones — will suffice?

SHARETweet about this on TwitterShare on FacebookShare on LinkedIn