Scammers employ many tactics to lure people into loan fraud schemes, such as sending unannounced robocalls or text messages.
Scammers often request pre-paid debit cards or payments through apps as payments for insurance or one-time fees.
Legitimate lenders generally require a credit check and verification of income and employment before giving loans, so be sure that the lender you select is registered in your state.
Don’t Pay Upfront
Regulated lenders never require upfront payments for loans; any lender asking you for this amount is red flagged. They may charge fees such as credit checks, application processing or one-off costs but legitimate lenders deduct these from your loan amount when disbursing it.
Be wary of companies offering loans or credit without checking your history and references first. Legitimate lenders conduct thorough investigations before making offers of credit.
Advance-fee loan fraud or credit card fraud targets those desperate for cash. It typically begins with an unscrupulous website or newspaper ad promising loans without credit checks or with upfront fees to be paid before disappearing with your funds and never fulfilling on their promises. To protect yourself against this kind of scammer activity, do your research beforehand by shopping around and comparing rates and costs before applying for loans.
Don’t Be Pressured
If someone pressures you into making an instantaneous decision, this may be a scammer trying to con you out of money. A legitimate lender should allow for ample time for decision-making before forcing an imminent one on you.
Avoid websites or newspaper ads offering loans with guaranteed approval at ridiculously low interest rates, which often turn out to be scams.
Be wary of “lenders” who require you to pay upfront application, processing or security deposit fees or insurance premiums – these upfront fees can cost more than the loan itself and constitute advance fee fraud – it is one of the most popular loan scams and should always be recorded so you can detect such fraudulent practices quickly. To stay safe it is advisable to keep an accurate record of all your transactions including EMI payments so as to detect these illegal practices early.
Don’t Give Out Personal Information
Be wary if a lender requests sensitive personal data such as banking details or passwords from you; legitimate lenders would not do this, while providing such details could lead to identity theft and breach.
Keep an eye out for any lender offering guaranteed approval without reviewing your credit or financial documents, as these offers tend to be fraudulent.
Be wary of lenders offering loans only through email or by phone without an online presence such as a website. Always verify the physical address on any lender website using Google Maps; also look out for any that use fake names, provide inconsistent or misleading information or use unfamiliar terms – these could all be indicators of fraud! Poor or nonexistent Better Business Bureau ratings could also indicate potential danger.
Don’t Sign Any Paperwork
Lenders that require you to sign a contract prior to disbursing funds should be avoided at all costs, as these lenders use pressure tactics such as timed offers or threats of something bad happening if you don’t sign right away.
One of the most egregious loan scams involves advance fees. This occurs when a potential borrower is told they’ve been approved for a loan or credit card but must send in an upfront fee to process the application process, pay security deposits or purchase insurance policies – then left without their promised loan or card. The fraudster then takes their money and vanishes without providing the promised service or product to anyone.
Compare offers from multiple lenders and save all correspondence, texts and transaction records as this may assist authorities with tracking any potential fraudulent activity and prosecuting those responsible. Furthermore, if you suspect being the target of a personal loan scam report it immediately to law enforcement and your bank.
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