What is debt bundling?
Debt bundling is when money lenders convince customers to borrow more money so that they can get more profit.
Debt bundling is usually used when loan is given and in exchange, the customer gives something valuable, such as mobile phone, furniture, or makeup tools. Many money lenders have bundled loans that target migrant domestic workers (‘MDW’).
Is debt bundling illegal?
Under the Money Lender Ordinance in Hong Kong, a money lender is someone whose business is making loans and someone who advertises themselves as someone who gives loans.
It can be difficult sometimes to understand if someone is a money lender or if they are illegally lending money. Many illegal moneylenders combine giving loans together with other goods and services. For example: an electronics store sells mobile phones and also offers loans as an “additional service”.
Under the Money Lenders Ordinance, all money lenders must be licensed to be a money lender. If you are not sure, ask to see the money lender’s license before agreeing to a loan with them.
How can I check if the money lender is licensed?
The Hong Kong Companies Registry has a list of licensed money lenders which can be found here. If you are not sure if the money lender is licensed, you can check for their name on this list.
Helpful Tips
- Take your time to understand what offer the money lender is making to you before agreeing. If you later find that the money lender is illegal, the main issue will be how the money lender advertised the loan.
- For example, if an electronics store company is not a registered money lender, but then the company advertises on Facebook that they provide a loan, the company can be investigated by the authorities for money lending without a license.
- If you find out that the money lender is illegal, get help from the police by making a report or by contacting your Consulate.
- Do not immediately agree to the loan without taking time to understand the loan agreement.
- Do not delay taking action. If you think the money lender is illegal, get help from an NGO or legal advisor as soon as you can.
- Do not keep contacting money lenders if you think the loan is illegal. If you stop talking to the money lender, it will give a signal to the money lender that you will not give in to their demands.
