MONEYLENDING OR SCAM?

A friend of mine recently shared his experience of trying to obtain a loan from moneylenders after banks and other financial institutions were unable or unwilling to assist him.

When he attempted to report the matter to the Ministry, he received very little cooperation and was even advised to deal with it directly at the counter. However, despite making several attempts, the individuals over there denied any connection to the activities. What puzzled him further was that the same websites and contact numbers continued to operate actively, leaving him wondering why the matter had not been properly investigated or reported.

Based on his experience and so many others I saw online, I really do not understand how some so-called “licensed moneylenders” operate. Although they claim to be legitimate and registered, the borrowing methods they use often appear questionable and, in some cases, resemble tactics commonly associated with scams.

In Malaysia, licensed moneylenders are regulated under the Moneylenders Act 1951 and supervised by the Kementerian Perumahan dan Kerajaan Tempatan (KPKT). The law sets clear requirements on how loans should be offered and managed, including transparent loan agreements, regulated interest rates, and proper documentation. However, there have been instances where certain operators exploit their “licensed” status to gain public trust while applying questionable practices that may violate both the spirit and the provisions of the law.

Among the concerning practices sometimes reported are:

a) Requesting borrowers to transfer “processing fees” or deposits before a loan is approved.

b) Using aggressive or misleading advertising to lure financially vulnerable individuals.

c) Communicating primarily through informal messaging platforms rather than proper office channels.

d) Failing to provide a formal written loan agreement or clear explanation of interest calculations.

e) Imposing excessive charges that may contravene the limits permitted under the Moneylenders Act 1951.

Such practices raise serious concerns because a legitimate licensed moneylender should operate with transparency, clear contractual terms, and compliance with regulatory oversight. Borrowers should also verify the lender’s license through official channels such as the registry maintained by the Kementerian Perumahan dan Kerajaan Tempatan and be cautious of any arrangement that requires upfront payments or lacks proper documentation.

In essence, even when a lender claims to be licensed, the methods they use must still comply with the law. If the process appears irregular, opaque, or overly coercive, it may indicate misconduct that should be reported to the relevant authorities.

I sincerely hope that no one within the authorities are involved with such activities. The money belong to hardworking individuals losing them to moneylenders who prey on people’s desperation. I have also advised my friend to report the matter to the MACC.