I was having a conversation recently with a Chinese friend, who wanted to pick my brain about his legal options after the online P2P lender he had invested money in had gone under.
P2P lending is a popular internet based investment model in China, where individuals seek personal loans from groups of other individuals, all arranged via a single website. The problem is that this kind of lending is not closely regulated in China. There have been cases where these P2P lending websites have disappeared and taken investor’s money with them.
As it turns out, we have a paralegal on staff that used to work with the China Prosecutor’s office where they handled several such cases. He has several recommendations.
First of all, file a police report. In China it is important that an investor who has lost money or has been defrauded file a report. This will place their name on an official investors list. A court will refer to this list when distributing any money award received after fines and penalties are levied against the relevant company or individuals.
Secondly, all relevant documentation and materials need to be preserved, including the investment contract signed between the investor and the P2P lending company and any bank documents. This is important to prove the amount of money which you had invested, and will be important to calculate damages.
It is recommended to find and communicate with others who have lost money on the same investment platform. A group of coordinated investors will be more effective than several individuals separately pursing their own matters. Name a small group of contact persons who are responsible for communications with authorities.
The next step may or may not be obvious. Get a Lawyer. An effectively coordinated group may hire a single lawyer to advocate for the full group, lowering costs overall. Lawyers have the connections and experience to get better results, and they will communicate more effectively with police and judges. Often these kinds of cases will last several years.