CRACKS in the financial legal framework have led to the emergence of intermediary groups, disguised as non-governmental organisations, to exploit desperate borrowers.
Leveraging the power of social media, these "intermediaries" put on a helpful front while promoting their skills to bargain with moneylenders for the borrowers' benefit, including illegal ones.
Their services, which come with a hefty price tag, include negotiating extended repayment terms and protecting borrowers from physical intimidation.
Checks by the NST Focus team revealed that the absence of a legal framework to govern these so-called "intermediaries" has given rise to no fewer than 10 groups, some of which allegedly operate under the "purview" of non-governmental organisations.
Some of these groups are merely registered with the Companies Commission of Malaysia (SSM) as financial and business management entities.
Their intermediary services have also allegedly earned the "approval" of loan sharks, who take advantage of being relieved from the burden of pursuing repayments by redirecting their borrowers to these intermediaries.
Under the guise of helping loan shark victims, these intermediaries are complicit in crime by facilitating negotiations with illegal moneylenders.
Section 29AA of the Moneylenders Act 1951 stipulated that any person who assists an illegal moneylender shall be guilty of an offence and is liable to imprisonment for a term not exceeding two years or a fine not exceeding RM20,000 or both.
The lack of a legal framework also means that there is no proper monitoring of their activities, leaving many borrowers to fall victim to stalled negotiations and half-hearted work of these intermediaries.
Those who spoke to NST Focus claimed that these intermediaries would charge between 10 and 20 per cent of the total loan amount for their services.
Some would impose additional fees of up to RM1,500 as collateral for loan sharks to destroy any data, videos or images they have on the borrowers.
Despite all the fees, borrowers will still end up being left high and dry to bear their high repayments.
Speaking to NST Focus, Fuad (not his real name), who runs his own consulting group, claimed that loan sharks would almost always give them a price cut if bartered well.
He claimed that some of his competitors would take advantage by marking up the repayment amount to gain more from borrowers.
"I have been in the business for four years. I know that this (the additional fee to remove borrowers' data) is just a lie for them to earn more.
"I have a case where the borrower asked for a RM4,000 loan, but she got only RM2,000.
"The Ah Long then demanded RM4,000 from her, but another intermediary asked for RM5,500.
"This additional RM1,500 is just the intermediary's way of making money," he said, adding that he would have negotiated her repayment for less than RM4,000.
In addition to presenting themselves as influential figures, these intermediaries also share videos of their negotiations with moneylenders on social media to attract customers.
Meanwhile, Persatuan Hak Masyarakat Malaysia president Mustafa Shaik Ismail claimed that his organisation had received reports from many borrowers, who claimed to have been duped by intermediaries, including those from non-governmental organisations.
Some, he added, had even further victimised the borrowers.
"There was a case where the intermediary requested the victims to share their nude photos before claiming that they could pay their loans upfront, but later used the pictures to terrorise the victims to pay more," he said.
Mustafa, who admitted to running his own intermediary business, however, claimed that his services had nothing to do with his NGO, but was offered under his consulting company called MK Mark Trading.
Checks with SSM showed that the company is registered for clothing merchandise retail, online merchandising, business management, private consulting, project organising, engineering, and private and government tenders.
NST Focus has brought the matter to Assistant Commissioner Ku Mashariman Ku Mahmood of the Local Government Development Ministry's community credit control division, who stressed that the ministry had neither appointed any agents nor provided licences to any party to act as intermediaries between creditors and borrowers.
Ku Mashariman also confirmed receiving reports from borrowers, who claimed that they had to pay higher fees to these so-called intermediaries, some even abusing their non-governmental organisation status.
"If anyone has any issues with the licensed moneylenders, they should come directly to us.
"But if it involves non-licensed moneylenders, it would fall under the Commercial Crime Investigation Department.
"We have never appointed any agent or given licence to any group to act as negotiators with these moneylenders.
"As for NGOs, they are not supposed to provide services that are profit-driven," he said.