A report out of China describes an outlandish way for debt collateral.
A Chinese newspaper uncovered an usual lending scheme conducted in social media. Many Chinese students have been found to give nude photos to lenders to secure loans.
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The practice has been found rampand in groups on QQ, one of China's largest social media networks. To secure a loan of about $2,300 (15,000 Yuan), students would need to send a nude photo of them holding their ID. These loans also come with huge interest rates of up to 30% per week. If a student can't pay a rate, the lender threatens to publish their nude photo.
Students at famous schools and graduate students can get higher loans. Obviously it is even more embarrassing to these future managers to have their nude photo leaked. This increases their "credit score."
According to an insider, nude IOUs (I Owe U) have been around since a long time in China and are not just used by students in need for cash.
The report on the Nandu Daily (via people.cn) has raised a lot of attention in China and QQ has banned the practice from its platform now. Nudes photos are though accepted as IOUs also in underground loan networks.
Nude photos of people who could not pay back their loan have been going viral in Chinese social media. The lenders send the photos to family members to embarrass the borrower. The photos are then leaked and make the rounds on social media. As the nude photos contain the ID, the person is clearly identified.
Depiction of nudity has been historically viewed as immoral in China. Nudity is censored strictly by the Chinese government. This restricted view on nudity is engrained in the Chinese population, making this type of loan collateral possible.
Are nude IOUs also used outside of China? It is certainly the first time I heard about this way of getting a loan.
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Update: A day after we posted about that Chinese students giving nude photos as loan guarantees, the Associated Press covers this report out of China.