Briefing: Rong360 takes app down after lending practices outed on Consumer Day

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融360回应315晚会:主动下架APP并坚决抵制714 – TechNode Chinese

What happened: Fintech platform Rong360 has taken down its app after featuring in the annual Consumer Rights Day gala, organized by Chinese state media outlet CCTV, which uncovers unsavory practices seen as infringing on consumer safety or rights. The New York-listed company was singled out for hosting predatory “head-chopping” loan practices, where a portion of the principal is taken as a fee before lending. Examples included a RMB 7,000 (around $1,040) sum that eventually became a RMB 500,000 (around $74,460) debt. Some loans also garnered the nickname “714 anti-aircraft missile” for their 7 or 14-day loan cycles. After being singled out, Rong360 pledged to take down its app as well as some products. It also apologized to users who suffered losses, and said it would strengthen standards for such products in the future.

Why it’s important: Rong360 provides search and recommendation services for loans, as well as other financial products such as mortgages and credit cards. It also offers P2P loans, which saw soaring default rates in June (in Chinese) that triggered public protests and a widespread crackdown. In the past, authorities expressed concern over the rise of short-term consumer loans in China, which have surged alongside the ratio of household debt to GDP. Despite it all, Rong360 has largely weathered the storm as a third-party platform. On Friday, however, shares sank 12% by market close.