Pix and “Jogo do Tigrinho” boost loan sharking in Brazil

“Loan via Pix in less than 1 minute” This is what a series of advertisements on social media promise. The offer of credit without any major requirements attracts many Brazilians. Some social media groups on the subject have more than 60,000 members, while profiles that describe themselves as loan sharks are accumulating followers.

The ease of the digital payment system, through the Central Bank’s instant payment system, is one of the factors behind the proliferation of offers, but increasingly the addiction to online gambling also stands out, for driving the problem.

A little more in-depth research on the networks is enough to find the first risks of alternative credit. Many users complain about abusive fees and say they are unable to pay the agreed amounts. Some report scams, non-payment, and sometimes the fact that they have been forced to pay an advance. There are also increasing reports of extortion by groups that lend money.

In 2023, the Mato Grosso police carried out an operation against the so-called “Gangue do Chicote”, which became famous in the state for torturing its victims with such an instrument and posting the images on the internet, as retaliation for the alleged lack of payment of loans.

Lena Carolina Forsman, criminal lawyer at the firm Bialski Lawyersrecalls that the crime of loan sharking – which carries a lesser sentence, from 6 months to 2 years – normally occurs in association with other more serious offenses. In addition to the abusive amounts charged, the expert points out a “cascade effect” generated by the groups, which includes money laundering, fraud, ideological falsehood and criminal association.

“Underwriting is much more common than you might think. We have seen an increase in adoption with Pix gaining prominence”says the expert. She claims that obtaining loans before the age of social media was more complicated, which usually involved cash and contacting advisors.

Financial educator and FGV-IDE professor Ana Paula Hornos points out that contacts with loan sharks are normally made through recommendations from friends who have already used these services, and “social media and Pix facilitate these transactions, allowing instant transfers”.

According to Forsman, releasing credit in an easier and less bureaucratic way encourages victims to seek the service. After the funds are sent, criminals often use manipulation techniques, such as threats, retaliation against family members or social exposure.

His experience is that, because they are unaware of the laws, many victims do not seek legal help. In some cases, the injured parties do not even know how to file a complaint regarding the issue. In addition, there is fear of retaliation and the fear of possible social stigma.

Gambling: a dangerous addiction, especially for young people

Recently, a series of cases involving threats from loan sharks for debts of tens and even hundreds of thousands of reais have been in the news. What they have in common is the victims’ addiction to sports betting and online casinos, such as the well-known Fortune Tiger, or “Tiger Game”.

In early July, the body of mechanic Marcos Roberto Machado was found on a highway near the city of Diamantino (MT). The family revealed to the police that the victim had a debt of R$200,000 with a loan shark, resulting from bets on Jogo do Tigrinho.

Hornos observes a strong trend towards the advancement of loan sharking in this area: “The cycle of debt often begins with seemingly harmless bets and small amounts, seen as a form of leisure. However, initial losses can lead individuals to gamble more in an attempt to recover the lost money.”.

Betting also offers the promise of quick and easy gains, highly attractive to young people looking for accelerated financial growth.

“Debts in the hundreds of thousands often result from a combination of compulsive gambling and the use of loans. When individuals have exhausted their savings and formal credit resources, they turn to loan sharks, who offer loans at exorbitant interest rates. The attempt to recoup substantial losses leads to ever-increasing gambling, rapidly increasing the debt.”assesses the financial educator.

Betting sector on the rise

A survey conducted by SBVC (Brazilian Society of Retail and Consumption) in June shows that the appeal of betting is stronger among young people, and that they are also the ones who risk more of their budget. Of the total number of people interviewed, 29% of bettors are between 25 and 34 years old; 22% are between 35 and 44 years old; 15% are between 18 and 24 years old; 13% are 65 years old or older; 12% are between 45 and 54 years old; and 10% are between 55 and 64 years old.

Of the gamblers surveyed in the study, 64% said they used their main income to place online bets, and 63% had part of their budget compromised; 28% of those who stopped buying something were between 18 and 24 years old, compared to just 5% between 55 and 64 years old.

In Hornos’ view, the adrenaline and excitement associated with gambling, combined with social reinforcement among friends, lack of experience and incomplete development of the ability to assess risk, make young people particularly vulnerable.

Regulation of this sector in Brazil is on the way. On the other hand, online casinos – such as Jogo do Tigrinho, for example – are not permitted in the country, and the platforms usually have headquarters in the Caribbean and on islands such as Malta.

The Brazilian betting market already accounts for the equivalent of 1% of the country’s GDP (Gross Domestic Product), according to an estimate by XP Investments about the sector. The report cites BNL, according to which Brazilians have bet between R$100 billion and R$120 billion in 2023. Companies in the sector would earn around 13% of the amount in circulation, that is, at least R$13 billion.

The SBVC study also revealed that 49% of bettors increased the frequency of their bets in 2024. A survey by Anbima (Brazilian Association of Financial and Capital Market Entities) on investors in Brazil highlighted the sector: in 2023, 14% of Brazilians used betting platforms. For 40% of them, the activity is a way to make quick money in times of need, with 22% considering it a form of financial investment.