Rong360 "Flow Diversion Scandal": AB Loans Resurrected, 61% Annualized High-Interest Fees Trapping Borrowers

Against the backdrop of ongoing tightening of financial regulation and accelerated reshuffling in the “loan facilitation” (aid lending) industry, some leading loan shopping platforms are still skirting the edge of compliance, providing traffic entry points for financial black-and-gray industries. Recently, consumer complaints have reported that the well-known loan platform Rong360 is involved in routing traffic for offline illegal loan intermediaries. It allegedly assists intermediaries under names such as “repayment supervisors” and “credit enhancement guarantors,” while effectively carrying out an “AB loan” scheme that operates as a form of predatory lending. At the same time, the online cash-loan products routed by its platform have problems such as excessively high interest and fee charges and compulsory add-on sales of membership services. The overall financing cost far exceeds the regulatory red lines and seriously infringes on the lawful rights and interests of financial consumers.

“AB loans,” as financial black-and-gray practices explicitly targeted and cracked down on by regulators, primarily hinge on using information asymmetry and sales scripts to package the scheme and lure borrowers with imperfect credit records to seek out relatives or friends with good credit. The borrowers apply for loans under the relatives’ or friends’ names, and ultimately the relatives or friends bear the actual repayment responsibility. Despite regulators conducting special campaigns multiple times and law enforcement across multiple regions solving a number of AB loan fraud cases—holding the intermediaries and practitioners involved accountable in accordance with law—these illegal businesses have not disappeared completely. Instead, they have returned in a more covert manner, aided by the traffic boost from loan shopping platforms.

According to consumer complaint information, after a user submitted a loan application on the Rong360 platform, the platform matched them with an offline loan intermediary organization in Beijing. The intermediary claimed that the user’s creditworthiness was insufficient and that they could not get the loan approved directly, repeatedly urging the user to find relatives or friends with good credit and no high liabilities to serve as a “repayment supervisor.” The intermediary also falsely claimed that the supervisor only needed to assist with collecting payments and bore no repayment risk. In subsequent communications, the intermediary clearly required that the loan funds be transferred first into the supervisor’s account, and then transferred by the supervisor to the actual borrower. In essence, this turned the “repayment supervisor” into the real loan applicant, which fully matches the operational characteristics of AB loans. After the user noticed the risk and refused to cooperate, they continued to receive harassing phone calls from the intermediary, demanding that the user proceed with the loan according to that scheme.

In this process, Rong360 played a critical role in customer acquisition and traffic routing. As a traffic hub connecting borrowers with loan service institutions, a loan shopping platform should establish a strict cooperation institution admission mechanism, comprehensively review the qualifications, business models, and compliance of the intermediaries it lets into the platform, and prevent providing traffic support to illegal institutions. But based on the actual situation, Rong360 did not fulfill necessary risk control and review obligations, allowing suspected intermediaries conducting AB loan business to be onboarded to the platform. This funneled consumers who urgently needed funds into predatory lending traps, making Rong360 a “traffic accomplice” for illegal intermediaries. Regarding issues such as traffic-routed illegal intermediaries and de facto support for AB loans, media sent an interview letter to Rong360, but as of the time this article was published, the platform has provided no positive response.

Beyond offline traffic-routed predatory lending, Rong360’s online cash-loan traffic-rerouting business also has serious compliance gaps. As a leading loan shopping platform, Rong360 does not lend funds directly; it mainly provides traffic matching services for various cash-loan products. On its platform pages, it promotes phrases such as “loan annual interest rate: 7.2%-24%” and “instant approval,” attracting large numbers of borrowers to apply. However, in actual operations, several products routed by the platform have issues such as interest-and-fee splitting and hidden charges. Through names such as consultation service fees, membership fees, and benefits fees, the platform substantially raises borrowers’ total financing costs.

Data from a third-party complaint platform show that one user borrowed 8,000 yuan through a loan product routed by Rong360, repaying over 12 installments. Each installment included high consultation service fees. Calculated by the IRR measure, the annual interest rate excluding service fees is already 36%, and after including the service fees, the real combined annualized interest rate approaches 61%, far exceeding the regulator’s interest-rate cap. In addition, products routed via Rong360’s associated platform Time Financing (Shiguang Jiqi) involve forced collection of membership fees. Even if users do not actively check the membership service option, fees are still deducted. After adding membership fees, the annualized interest rate also exceeds 36%. Of particular concern is that the funding partner for Time Financing is a network micro-lending company in Yingtan. The company’s legal representative is Rong360’s co-founder. There is an obvious relationship between the platform and the funding partner, yet this has not been adequately disclosed to consumers, which is suspected of concealing key information.

Even more alarming is that Rong360 and its associated platforms link membership benefits to loan approval. They claim that by opening a membership, users can enjoy privileges such as priority approval and no queue. In essence, this is forcing the sale of value-added services and effectively increasing borrowers’ financing costs. According to the new regulations on loan facilitation issued by the National Financial Regulatory Administration, platform operating institutions may not charge interest or fees to borrowers in any form; credit enhancement service institutions may not disguise fee increases under names such as consultation fees or advisory fees; all fees must be included in the calculation of total financing costs, and total financing costs must comply with regulatory requirements. Rong360’s above-mentioned operations clearly violate regulatory provisions and break through the compliance operating bottom line.

From the perspective of law and regulation, as an important participant in loan facilitation services, a loan shopping platform bears responsibilities that cannot be shirked, including qualification review, risk screening, and protection of consumer rights and interests. Under the Consumer Rights and Interests Protection Law and relevant regulations on loan facilitation supervision, platforms should conduct due diligence on cooperating institutions, establish a dynamic risk control mechanism, and when cooperation institutions are found to engage in illegal conduct such as fraud, predatory lending schemes, or high interest fees, they should immediately stop traffic routing, take products offline, and report to regulatory authorities. If a platform fails to fulfill its prudent review obligations and provides traffic support to illegal institutions, resulting in damage to consumers’ rights and interests, it must bear corresponding civil liability for damages; if the circumstances are serious, it may also face administrative penalties.

Lawyer Gan Xiaojun of Guangdong Jifang Law Firm said that if a loan facilitation platform turns a blind eye to illegal businesses such as AB loans and usurious loans routed through it, and fails to fulfill the obligations of risk screening and taking down products, it constitutes an act that infringes on consumers’ right to know and right to fair trading. In the current industry environment of strict regulation and strong enforcement, platforms should proactively shoulder their primary responsibilities, conduct comprehensive self-examination and rectification, clean up illegal cooperation institutions and products, and prevent creating survival space for financial black-and-gray industries.

Currently, financial regulatory authorities are continuously increasing efforts to rectify the loan facilitation industry, placing AB loans, predatory lending, usurious loans, and other related practices within the key crackdown scope. They have also clarified that commercial banks should implement list-based management of cooperating loan facilitation platforms and strictly prohibit cooperation with institutions lacking qualifications or engaging in illegal business practices. As a leading industry platform, Rong360 has not only failed to play a compliance demonstration role, but has instead tolerated the growth of illegal businesses. This has not only harmed consumers’ interests, but also disrupted the normal financial lending and credit order, bringing negative impacts to industry development.

For consumers, when facing loan promotions from various loan shopping platforms, they need to improve their risk awareness and be alert to manipulative sales scripts such as “low interest, instant approval,” “credit repair,” and “risk-free credit enhancement.” They should never easily provide guarantees for loans for others and should not sign blank contracts or agreements with vague terms. If they encounter issues such as AB loan schemes, forced charges, or excessively high interest and fee rates, they should promptly preserve evidence such as chat records, contracts, and transfer receipts, file complaints and reports with financial regulatory authorities and market regulatory authorities, and safeguard their lawful rights and interests through legal channels.

Healthy development of the loan facilitation industry depends on compliant operations and taking responsibility. Platforms such as Rong360 should face up to their own compliance issues, immediately rectify traffic-routed illegal intermediaries and tolerate high interest/fee behavior, and strictly implement regulatory requirements to build a risk control barrier. If they continue to ignore the compliance bottom line and tolerate financial chaos, they will ultimately face severe regulatory punishment and elimination by the market, paying a heavy price.

Source: 九州商业观察 (Jiuzhou Business Observation)

Author: 九裘小妹

Statement: This article is for sharing knowledge only and is intended to convey more information. It does not constitute any investment advice. Any person who makes investment decisions based on this assumes the risk.