Extortion and predatory lending have skyrocketed in Peru

When Julián, a 41-year-old Peruvian entrepreneur, opened a fruit shop in a suburb of Lima, Peru, back in 2022, he put up a big sign with a WhatsApp number for customer support. He was hoping to get messages from potential clients. Instead, what he got were death threats.

Julián didn’t want to share his full name out of fear of retribution.

“I was getting daily messages from someone I didn’t know,” Julián explained, “saying things like ‘we know that you have a business, we know where you and your family live, and we need you to transfer us the equivalent of $1,300 every other week, or you’ll have to bear the consequences.’”

Julián reached out to the police, and they advised him not to send any money. But when he started talking to other business owners in the area, he learned that some of them had also been extorted, and even kidnapped. Some were already paying these fees, while others didn’t even want to discuss the matter. Everyone was terrified.

One morning, when he was opening the shop, he found a bullet at the entrance with a handwritten note asking, one more time, for money. 

Days later, a masked man on a motorbike entered his business with a pistol, demanding what he described as a “protection fee.”

“I got scared and confused, and didn’t really know what to do,” he said in a recent interview. Julián began transferring the fee via a digital wallet for several months, until he finally decided to sell his business and move to his native city, 300 miles away.

Cases of extortion in Peru shot up 370% between 2021 and 2023, from 4,761 to 22,396, according to the country’s Attorney General’s Office. 

That represents close to a fivefold increase in just two years. The trend is continuing into 2024, according to General Marco Antonio Conde Cuellar, director of criminal investigation at the Lima Police Department. 

“We’ve been capturing between four and five criminal gangs linked to extortion every week in Lima,” Conde Cuellar said.

The majority of the new cases are reported by small business owners, especially owners of “bodegas”, a type of convenience store popular in Latin America.

Andrés Choy, president of Peru’s National Association of Bodega Owners, said of the 22,000 members of its organization, 13,000 have either been extorted or threatened by criminals. At least five “bodegueros” have been killed in extortion-related conflicts, according to his own registry.

Julio Surco, director of the National Association of Small Businesses in Peru says many main street businesses are even hesitant to do updates or renovations in their shops, because it might signal to potential extorters that they have money.

Many, like Julián, are forced to pay a “protection fee.” Others end up borrowing money from loan sharks, who demand exorbitant interest rates. About half a million people in Peru carry this kind of debt, according to the National Association of Creditors. The 1.2 million Venezuelan migrants living in Peru are also vulnerable to being exploited by predatory lenders. The most common reason borrowers seek out the loans is to pay other debts.

“Usually, the delinquents involved in these plots have little criminal experience, and are venturing into the extortion business because it’s relatively easy to do, and it’s very lucrative.”

Cuellar added that it’s common that the extorters pretend to be part of larger transnational criminal cartels from Colombia or Venezuela, to generate more fear. In some cases, however, the link does exist, posing a bigger challenge for the authorities.

Earlier this year, police in Lima dismantled a Venezuelan-Colombian group with 20 members devoted to predatory lending. They also seized guns and explosives from the group.

“It’s hard to put any real estimates on how lucrative extortion can be, but it’s a significant percentage of GDP of any country in Latin America,” said Chris Dalby, director of World of Crime, a security think tank. 

He said extortion doesn’t always get a high level of attention from the authorities. “A lot of it happens at a low level, in a non-violent way, and authorities tend to be more focused on more flashy crimes, like homicides and kidnappings.”

Dalby added that it’s crucial to tackle extortion because it generally ends up leading to violent crime, and can end up affecting whole industries, cities and towns. 

“Extortion is, yes, going to a shop and shaking down business owners for weekly or monthly protection money. But it’s also controlling entire industries, monopolizing them and extorting every single player in the supply chain in a very coordinated, and almost taxed way,” Dalby explained.

General Conde Cuellar said one of the main challenges his office faces in stopping extortion is the high number of cases that go unreported. “Victims get so scared to the point that they don’t even want to make a formal complaint,” he explained. 

Choy said, in many cases, bodega owners are told to report the crime in person, and when they go to the police station, they are followed by strangers. “People are so scared of retaliation that, many times, they decide not to go.” 

Extortion and predatory lending have skyrocketed in other neighboring countries, as well.

In Chile, extortion cases have almost doubled since the pandemic, according to data from the Public Ministry. 

In Ecuador — the country with the highest murder rate in Latin America — drug cartels control territories along the Pacific coast and have established tax systems where companies, small and large, are demanded “protection fees” known as “vacunas”, a Spanish word for vaccines.

After the financial shakeup that came with the COVID-19 pandemic, extortion became particularly important for the survival of a lot of criminal groups, according to Chris Dalby. “In recent years there’s been increased criminal competition to control territory, whether it be urban or rural. And all of those groups see extortion as the main way of controlling that territory and making money from it.”

Research has also shown that debt has historically been a common cause of migration across the Americas.

Abby Ardilles contributed reporting for this story from Lima, Peru.