Beware! "Machine Rental Cash-Out" Schemes Hide Illegal Lending, With Cases Showing Annual Interest Rates Up to 1155%

If you’re short on money and looking for shortcuts, you might fall into the trap of “rent-to-cash” schemes. What seems like an easy way to get cash with low barriers actually leaves many people with debts far beyond expectations, along with hidden fees, aggressive collections, and information leaks. Renting a phone but not being able to use it for personal purposes—what illegal lending tricks are hidden behind these “rent-to-cash” schemes?

Mr. An from Shandong reported on the Black Cat Complaint Platform that in April last year, he was introduced by a loan agent to rent a smartphone from a merchant on a certain platform. The phone was sent directly to the lender’s company, and Mr. An only received 6,000 yuan, which was essentially a loan to rent the phone, then exchanged for cash. Now, after nearly a year, the rental period is ending, and the platform demands Mr. An either return the phone or buy it out as agreed.

Mr. An said the lending company loaned him 6,000 yuan, claiming it was to be repaid as rent. He’s been paying it back, but the phone has never been used by him. The platform demands return, but the lender refuses to give the phone. Now Mr. An faces a dilemma: whether to extend the lease or buy out the phone, both options will cost him a lot more money.

Mr. An: “The rent plus the 7,900 yuan buyout means I’ve paid an extra 6,000 yuan. Now they say I can either buy it outright in one payment or in 12 installments, which doesn’t make sense.”

Mr. An and his friends tried to contact the lending company to get the phone back, but they clearly stated that the platform’s charges had nothing to do with them, and the platform merchants told Mr. An to go back to the lending company.

On the Black Cat Complaint Platform, searching with the keyword “rent-to-cash,” there have been 249 related complaints, with many consumers experiencing similar situations as Mr. An.

Previously, the Jing’an District People’s Court in Shanghai publicly held a trial for a case involving disguised high-interest lending under the guise of phone rentals.

Ms. Tang contacted a loan intermediary she knew, who said she could rent a phone through a platform with installment payments and then cash out by discounting the phone. Ms. Tang signed an installment rental agreement online. After paying the first installment, the intermediary sent the rented phone to a designated merchant for evaluation. After deducting agency fees and depreciation costs, the remaining cash was given to Ms. Tang. After paying two installments, Ms. Tang found the interest rate was too high.

The official retail price of the phone was about 9,999 yuan, but the settlement price was at most 8,000 yuan. After deducting the first installment, Ms. Tang received about 6,000 yuan, with the intermediary taking a 10% service fee.

After reporting the case, the Shanghai Public Security Bureau Jing’an Branch filed a criminal investigation and arrested suspect Dai. Judge Qi Tingting from the Jing’an District People’s Court explained that the so-called “rent-to-cash” scheme is actually illegal lending.

From July 2023 to February 2024, Dai illegally lent over 1.7 million yuan to more than 130 people, with annual interest rates reaching between 37% and 1,155%. In reality, he used technical means to evade regulation, setting up a rental platform via the internet, disguising high-interest loans as rental fees, and engaging in usurious lending activities.

The Shenzhen Office for Preventing and Combating Illegal Financial Activities issued a warning on September 30 last year about risks associated with schemes like “rent-to-cash.” It explicitly states that the market has seen “credit leasing,” “0-yuan purchase,” and “free gift upon rental” schemes, which are essentially illegal high-interest loans disguised as leasing. These practices severely infringe on consumers’ rights and disrupt financial market order.

Senior Partner Yue Shanshan of Beijing Yuecheng Law Firm analyzed that “rent-to-cash” is very different from legitimate leasing or lawful lending.

Legitimate leasing involves paying rent to gain the right to use the leased item, and at the end of the lease, the item must be returned. Legal lending involves signing a contract with the borrower, providing funds, and paying lawful interest. However, “rent-to-cash” schemes involve borrowers not intending to use the phone but simply extracting cash through the phone, disguising high interest as rental service fees, thus bypassing government interest rate caps and licensing requirements.

If the public falls into a “rent-to-cash” trap, they may face insurmountable debts and even violent collection practices. Yue Shanshan advises learning how to legally cut losses and respond to such high fees.

Victims or those deceived still have the obligation to repay the principal they actually received from a civil law perspective. Any interest exceeding the legal protection limits is not legally protected. It’s important to keep evidence such as chat records with intermediaries, rental contracts, repayment records, and recordings or screenshots of collection calls or messages, and report to relevant authorities. Remember, do not borrow more money or use loans to repay existing debts, as this will only deepen your trouble.

Judge Qi Tingting from the Jing’an District People’s Court warned to be vigilant against high-interest loans disguised as leasing and to stay away from illegal “rent-to-cash” schemes.

The public should establish rational consumption habits and refuse to engage in loan schemes under the guise of “rent-to-buy and free gifts.” If you genuinely need a loan, go to licensed financial institutions. Keep all loan agreements and repayment records, and report any illegal activities to authorities to protect your assets and credit record.

(CCTV News)