Care­less on the Chi­nese cam­pus

China Daily (USA) - - BUSINESS - By JIANG XUEQING jiangx­ue­qing@ chi­

Pro­lif­er­a­tion of con­sumer fi­nance chan­nels on­line and their tar­get­ing of univer­sity stu­dents, who usu­ally do not hold credit cards, in a bid to gain new cus­tomers and mar­ket share have led to tribu­la­tions and tragedies on cam­puses in China.

The most shock­ing in­ci­dent in­volved Zheng Dex­ing, 21, a stu­dent of the He­nan Univer­sity of An­i­mal Hus­bandry and Econ­omy. He jumped to his death off a ho­tel build­ing on March 9, un­able to re­pay 589,500 yuan ($89,320) he had bor­rowed from var­i­ous on­line lend­ing plat­forms.

In a sense, Zheng’s death can be linked to the in­ter­net­driven easy con­sumer fi­nance mar­ket that makes it pos­si­ble for young adults to avail credit be­yond rea­son­able lim­its, of­ten by ex­ploit­ing loop­holes and poor checks in the sys­tem.

It emerged that Zheng took loans from as many as 14 on­line mi­crolend­ing plat­forms. He could do so by mis­us­ing his own stu­dent ID card as well as those of 28 other stu­dents. He had even writ­ten the fam­ily ad­dresses of other stu­dents in his loan ap­pli­ca­tion forms, so that lenders could not de­tect his ex­ist­ing credit records.

He bought iPhones through in­stall­ment plans and resold the pre­mium smart­phones for cash, which he then splurged on soc­cer bet­ting.

Af­ter his death, the 28 stu­dents said they were vic­tims of Zheng’s mis­rep­re­sen­ta­tions and hence should not be held re­spon­si­ble for pend­ing loan re­pay­ments.

For its part, the He­nan Univer­sity of An­i­mal Hus­bandry and Econ­omy warned its stu­dents against bor­row­ing money from on­line loan firms.

That marked a full cir­cle for mi­crolen­ders who, in re­cent years, grewrapidly by sell­ing con­sumer credit prod­ucts to a va­ri­ety of tar­get groups, in­clud­ing col­lege stu­dents.

Their “buy first, pay later”idea was easy to sell. Credit ser­vice users could choose be­tween de­layed pay­ments and re­pay­ments in in­stall­ments. Stu­dents need to spend just five min­utes to fill in the con­sumer credit ap­pli­ca­tion on­line.

Later, they are re­quired to take their cit­i­zen ID card as well as the stu­dent ID card to the lender’s on-cam­pus agent for ver­i­fi­ca­tion. Typ­i­cally, the agent takes less than an hour to ap­prove credit.

Too easy, it seems, com­pared to the high bar­ri­ers to ob­tain­ing credit cards of banks and other fi­nan­cial ser­vices firms.

Agreed Huang Zhen, a pro­fes­sor of the lawschool of the Cen­tral Univer­sity of Fi­nance and Eco­nomics. He called for a change in the way credit is ex­tended to stu­dents. Huang Zhen,

He said “lenders must as­sess bor­row­ers’ abil­ity to re­pay and proac­tively coun­sel them against tak­ing un­due risks”. In­stead, in the cur­rent sce­nario, some lenders op­er­ate on univer­sity cam­puses with im­punity, com­pro­mis­ing on stan­dard in­dus­try prac­tices for the sake of gain­ing cus­tomers and mar­ket share.

Huang said col­lege stu­dents gen­er­ally lack risk aware­ness and the abil­ity to man­age per­sonal fi­nances. Given the emer­gence of on­line con­sumer fi­nance chan­nels, per­haps it is time for univer­si­ties and col­leges to in­tro­duce reg­u­lar coun-

Lenders must as­sess bor­row­ers’ abil­ity to re­pay and ... coun­sel them against tak­ing un­due risks.”

pro­fes­sor of the law school of the Cen­tral Univer­sity of Fi­nance and Eco­nomics.

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