Many Filipino domestic workers in Hong Kong, such as Mary, who we’ll use a pseudonym for, support their large families back in the Philippines with their monthly remittances. However, when she needed rapid funds for a family emergency back home, she fell into a financial trap through a Facebook Messenger advert proposing instant loans of HK$3,000.
Believing the app she was directed to was for processing the loan, she provided her personal information, including her employment contract and passport copy. MKich to her dismay, she received only half the promised loan amount but was instructed to pay back the full amount a week later. Failing to do so, she was ensnared in a loop of multiple online loans, each one doubling her debt.
The loan shark’s tactics escalated from charging an astronomical unlawful interest rate of 100%, to intimidation, culminating in threats of distributing explicit images and videos of Mary to every phone number in her contact list, causing her great distress and sleepless nights.
She is unfortunately not alone in this crisis. A [study](https://enrichhk.org/sites/default/files/2019-09/Final_The-Value-of-Care_Full-Report.pdf) by data firm Experian and Enrich, a charity for empowering migrant domestic workers, revealed that 83% of such domestic workers in Hong Kong are in debt. Despite the [legal cap](https://www.hkma.gov.hk/media/eng/doc/key-information/guidelines-and-circular/2022/20221027e1.pdf) on loans under the Money Lenders Ordinance being 48% per annum, these loan sharks bypass the law by operating exclusively and covertly online.
Online Scams and Their Victims
According to Sheetal Sarup, a financial educator and board member at the charity [HELP for Domestic Workers,](https://helpfordomesticworkers.org/) online loans can hide complex and astonishingly high interest rates of up to 1,200% per annum. These scams, specifically targeted at English-speaking domestic workers from the Philippines, have been on the rise since March, according to Rachel Li, the head manager and researcher at HELP.
To conclude this journey from financial hope to despair and intimidation, we will answer three critical questions.
Frequently Asked Questions
* _What’s the rate of indebtedness of migrant domestic workers in Hong Kong?_
A staggering 83% of these workers are in debt. This large percentage is partly due to the many online scams that primarily target them.
* _Are these loan sharks operating within the legal framework of Hong Kong?_
No, these predators are operating exclusively online, thus bypassing Hong Kong’s laws, which cap loan interest at 48% annually.
* _Who are the primary victims of these online scams?_
Typically, they target English-speaking domestic workers, primarily those from the Philippines.In a recent gathering of the Progressive Labour Union of Domestic Workers (PLU) in Hong Kong, the issue of illicit online lending was thoroughly discussed. Some worry that domestic workers may fall into dangerous financial traps due to their lack of understanding about these loans and how they work.
Unaware of these risks, they find the promise of easy money enticing, particularly when they’re already financially strained. Unfortunately, this often leads these workers into a perpetual cycle of borrowing.
Many of these migrant caregivers are vulnerable to predatory practices, especially when they’re burdened with recruitment fees charged by dishonest employment agencies. For instance, Mary, a migrant domestic worker, paid close to HK$16,000 to an agency in Philippines, equivalent to almost four months’ earnings, before she even started working in Hong Kong.
This pattern of initial indebtedness created by recruitment costs is identified as a crucial issue in a study conducted by Justice Centre Hong Kong in 2016. Recent findings (2021) from social impact startup, HelperChoice, reveals that nearly half of the domestic workers have been overcharged during recruitment.
Having to shoulder the economic wellbeing of their families back home often further exacerbates the problem. The wages they earn in Hong Kong, notwithstanding being significantly more than what they could make in their home countries, still aren’t enough to support their families who rely on them for financial stability. Sudden expenses and emergencies prompt these workers to resort to loans.
Rise in living costs means there’s often a gap between their earnings and what’s needed to support their families, further pushing them into the clutches of online lenders. Angela, another domestic worker who borrows to keep up with increasing costs, states the uncomfortable fact that migrant workers often have no other choice but to resort to these lending companies. Even when aware of the dangers associated with these loans, many workers find themselves cornered into borrowing due to the high cost of living in their home country, which has been struggling with slow wage growth and rampant inflation.
#### FAQs
**Why are migrant domestic workers falling prey to illicit online lenders?**
Migrant workers often find themselves in a tough spot due to the high cost of recruitment agencies and the immense financial strain of providing for their families back home. Unaware of the dangers of illicit online lending, they’re lured by the promise of easy money, leading to a continuous cycle of borrowing.
**What role do recruitment agencies play in this issue?**
Many migrant domestic workers start their working journey already burdened by debt due to unscrupulous recruitment agencies, often charging them several times their monthly earnings before they have even started working.
**What is being done to help these workers?**
Organizations and unions like the Progressive Labour Union of Domestic Workers (PLU) are raising awareness about these issues, while published research and surveys continually point towards this problem. However, tangible action to support these workers and address the root causes of their financial struggles is still needed.
According to a recent [survey](https://pulseasia.ph/updates/june-2024-nationwide-survey-on-national-concerns-and-the-presidents-state-of-the-nation-address-sona/?portfolioCats=249) by Pulse Asia Research, about three-quarters of Filipinos consider controlling food prices as the primary duty of the government. This concern surpasses issues like low wages, poverty, and unemployment.
The monthly remuneration for migrant domestic laborers in Hong Kong stands at HK$4,870, in addition to a food allowance of HK$1,236. However, PLU members reveal that sometimes workers are not given their food allowance.
Sheila, a member of PLU, expresses her concerns over how the meager wages of domestic workers are insufficient to support their families. Weng, another member, echoes these sentiments and highlights how rising inflation has rendered the forex value demonetarily insignificant.
He urges the government to reconsider the pay scale and adjust it in a way to give them decent living conditions. According to him, a decent life implies sufficient remuneration to cater to their family’s and personal needs.
Members of Hong Kong Federation of Asian Domestic Workers Union have urged the government to increase the migrant domestic workers’ minimum monthly pay. They demand a living wage of about HK$6,300 and a provision of a food allowance amounting to HK$2,000. This increase will allow workers to build savings to be used during emergencies.
Carmel had taken loans to support her family in the Philippines. She resorted to revolving loans to repay the first one. However, the associated fees and conditions of these loans skyrocketed her repayment amount. The harassment she faced due to her inability to repay her loans impacted her mental health to such an extent that she contemplated suicide.
Carmel’s employer helped her out after the collectors started harassing them too. After repaying her debts, they connected her with HELP, a support group, who provided her with counseling. This support helped Carmel regain her confidence to confront her fears.
Despite HELP’s efforts at dealing with such online lenders, these loan companies are largely under-regulated and often have possible criminal associations. The organization advises domestic workers to report these incidents to the police to raise the issue. Unfortunately, workers are often too scared to take action and, in some cases, they lose their employment.
##### Frequently Asked Questions:
What is the monthly salary of migrant domestic workers in Hong Kong?
Migrant domestic workers in Hong Kong currently earn a minimum monthly wage of HK $4,870 alongside a food allowance of HK $1,236.
What do Hong Kong’s domestic worker organizations demand in terms of wage adjustment?
Unions representing domestic workers are advocating for a living wage of around HK$6,300 and a food allowance of HK$2,000 per month.
How is the issue of online lenders with possible criminal connections being dealt with?
Currently, the organization HELP advises workers to report their encounters with such lenders to the police for effective action. However, often workers are too scared to report it or end up losing their jobs because of it.When it comes to money borrowing scams, a significant portion of workers, mainly migrants who have relocated to Hong Kong to chase their dreams, often fall prey to deceitful lending procedures. Investigations directed at four loan apps namely, Sayo, EU Cash, Panda Cash, and Kaka bomb uncovered numerous incidents of unethical debt recovery procedures. These alarming practices prompted a warning from the Philippine Consulate.
All four of the above-mentioned loan apps have been involved in suspicion of violating Hong Kong’s money lending regulations. Despite their alleged withdrawal from Google Play Store, later investigations revealed that some of these dubious money lending apps had simply rebranded themselves with new names and thus were still operational.
Regarding the claimants, three Filipino domestic workers declining to reveal their real names, furnished comprehensive details about their personal stinging experiences. Such dreadful events often involve victims falling prey to stern manipulative tactics, such as threats of viral public exposure of their borrowed debt details.
Lamenting on this matter, Li a human right researcher posted that despite being illegal, these online lenders are on the rise primarily due to the inability of loan seekers to follow through on the reporting process. Reasons mostly revolve around anxiety and fear that such actions could result in detrimental consequences for their employment circumstances.
Police awareness of these illegal issues has reportedly increased over the years, as reflected in their statistics which recount 9 reports received from January to May in the year 2023, an increment by 1 in the previous year during the same period. It’s highlighted that a significant upsurge by 29% in the rate of fraudulence led this rise, which is mostly attributed to notorious online scams.
The pivotal role of increased awareness amongst the public about these unscrupulous online lenders was emphasized by PLU (Progressive Labour Union). They urged the government and Philippine consulate authorities in Hong Kong to take proactive measures. The Labor Department furthered this by issuing an email response to HKFP (Hong Kong Free Press) stating their committed stance on advising domestic workers to maintain prudent financial habits whilst avoiding dubious loans.
Ideas on developing informative sessions to educate domestic workers about such fraudulent activities were also shared. Philippine consulates are reportedly strategizing on implementing post-arrival seminars, to educate migrant workers on managing finances prudently whilst warning against manipulative loaners. These seminars paused amidst the COVID situation are now speculated to restart by August or September of the current year.
Concluding, all who shared their plight conveyed their vehement plan to never seek loans from online lenders in the future. They expressed hopes that their shared experiences would serve as informative cautionary tales for many others.
It’s worth noting that if you are looking for support, several helpline facilities are always open to serve you. The Samaritans number is 2896 0000 (24×7, multilingual). Besides, the Suicide Prevention Centre 2382 0000 or the government mental health hotline 18111 are some of the ubiquitous helpline numbers available.
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### Frequently Asked Questions
##### How are online lending scams impacting Filipino micro workers?
Many Filipino migrants who moved to Hong Kong tend to fall victim to disreputable lending practices. They often face various menacing tactics to recover debts, such as overt threats of going viral online with details of their borrowed debt.
##### What steps are being taken to tackle illegal online money lending activities?
The Philippine consulate, along with the Labour Department, are advising domestic workers to manage their finances responsibly and avoid borrowing money from suspect sources. They’re also working toward education & raising awareness regarding predatory lending practices.
##### How are these warnings being circulated among concerned stakeholders?
efforts are being made to spread awareness about these predatory practices through seminars held in collaboration with consulates or labor department. The Philippine government’s Migrant Workers Office plans on resuming post-arrival seminars to educate migrant domestic workers on such issues.
