You’ve heard it from us many times by now: if it sounds too good to be true, it probably is! While sometimes the signs of a scam seem obvious, fraudsters often rely on manipulation tactics and enticing offers to prey on victims when they are at their most vulnerable. One common way they do this is through personal loan scams.
Personal loan scams are just as they sound: promises of quick cash that instead turns out to be a trick to gain personal information, or charge insanely high interest payments or ‘application fees’.
While anyone can be targeted by this type of scam, certain economic climates can make them all the more common. During hard times like the Covid-19 pandemic or a recession, fraudsters amp up their tactics to trick victims into a fake or predatory loan.
A high loan amount with an interest rate lower than industry standards is cause to be suspicious. Scammers create these ‘deals’ to lure in victims who may not qualify for personal loans at other financial institutions.
Similarly, scammers also guarantee your loan approval. Legitimate lenders still need to check your credit score, income, and other financial indicators to determine what kind of loan they can offer.
A hallmark of most scams, fraudulent loan scammers will pressure victims to act soon. Whether it’s an offer good for ‘today only’ or the threat of higher interest rates if there is not an immediate applications, scammers aim to have their victims act quickly with limited information.
Loan fraudsters also reach their victims through untraditional methods compared to legitimate lenders. This could be through unsolicited texts, phone calls, or even social media messages. Be wary of anyone who reaches out with a ‘great deal’ that you have not specifically requested.
Along with a ‘guaranteed approval’ some fraudulent lenders will also charge a fee up front, claiming it covers an ‘application fee’, ‘insurance’, or ‘processing’.
Remember that legitimate lenders do not require payment before you receive your loan amount. Typically, if there are any application fees, they are deducted from the loan amount before you receive the funds.
As we’ve reviewed in other scams, being asked to pay in gift cards or other unconventional payment methods like Venmo, CashApp or cryptocurrency is a tell-tale sign that you are dealing with a fraudulent lender.
If you are feeling wary when dealing with a new lender, remember a Google search can save you a world of trouble! Look for their website, social media, and reviews from other customers.
If you are unable to find contact information like an address or phone number, there is a high chance the lender is fraudulent. You should be able to easily contact your lender through a customer service line or email address.
While reviewing the lender’s website, look carefully at the URL and make sure it matches the name of the lender and is secure (the URL includes https and has a little lock icon next to the address). Remember to look up their website on your own; don’t click on any links you receive from them until you are sure they are legitimate!
Researching a lender’s reputation can also tell you a lot about them. Look on reputable sites like the Better Business Bureau’s or search something like “[company name] scam”. You can also look up the business with the Consumer Financial Protection Bureau to confirm that it is a registered and licensed lender.
If you have been scammed, the first step is to attempt to get your money back and stop communicating with scammer. If you used a debit or credit card to pay the scammer, reach out to the financial institution immediately to report the fraud and increase your chances for reimbursement.
You can also file a report with the FTC, CFPB, or your local law enforcement. It is extremely important to monitor your accounts and secure your information, especially if you have given sensitive information to the scammer. Visit identitytheft.gov/ to find out steps to secure your information if you think the scammer has information like your Social Security Number. Update passwords and continue to monitor your financial accounts and credit score. Placing a credit freeze on your account is a great way to protect yourself from more fraudulent activity.
Realizing you have been scammed can be embarrassing and frustrating, but it’s important to reach out and take the proper steps to protect your information and accounts!
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