Nowadays, with everything from lending to shopping, going digital, it is becoming easier for scammers to take advantage of people's unawareness. That is why people should exercise extreme caution not to fall victim to con artists. We understand how tempting the idea of getting a quick online loan might seem when you need a quick financial boost to get back on track; nevertheless, you should beware of loan frauds that abound on the Internet. However, it doesn’t mean that you can’t do anything to avoid these scammers; there are certainly some red flags that alert you that something is amiss. Below we've provided a list of five loan scams that are very common in 2022.
1. Phishing, Smishing, and Vishing
Phishing, smishing, and vishing are among the common loan scams that con artists may use to steal your personal information to empty your bank accounts, get loans in your name, and commit other crimes. Pretending they are from a legit company, these scammers may require quick actions to recover your bank account, regain access to your online banking app, etc.
Phishing is sending the victims clickbait links in emails. These links lead the victims to websites where they have to provide sensitive or non-sensitive personal data. These fraudulent emails may contain information regarding your bank account or loan.
Smishing also presupposes sending fraudulent links, much like phishing, with the difference that it is a text message. Once you click on these links included in the text message, apart from stealing your personal data, con artists may also install viruses or spyware on your device.
Vishing is the fraudulent calls. The scammers call the victims in the names of their banks or credit unions and ask for personal data (name, address, bank account, credit card information, Social Security Number). This information might be enough to take out online loans in your name.
2. Upfront Loan Fee Scams
Many con artists take advantage of people's urgent need for fast cash. These bogus lenders offer instant loan approval and demand upfront money to begin a loan application. When a victim transfers money, the scammer-lenders disappear. A respectable lending organization would never charge fees for starting a loan process; instead, the origination costs and other payments are paid at closing. In certain situations, the borrowers receive the loan amount minus the fees.
3. Mortgage Loan Modification Scams
Con artists may claim to keep your property from foreclosure in exchange for a fee and interest payments to such "relief" providing companies rather than your actual lender. Be aware that this is a common scam scenario in which these agencies take your money rather than pay the loan. You will also lose both money and property.
4. Loan Payback Help Scams
Scammers may act in the guise of the state-authorized agencies, claiming debtors suffering repayment troubles that they can provide aid for a charge. As a result, you may find yourself in a worse situation than before you spoke with these fraudulent companies: they steal your money while professing to help you, but the truth is very different.
5. Repurchase Scams
If you have trouble repaying your mortgage loan, there will be "kind investors" willing to assist you in returning the debt and repairing your credit. It, however, appears to be too good to be true. Scammers will get you to sign a document transferring your property to these aid organizations. The desperate borrowers can’t grasp that they would lose their property by signing such a document.
What Are the Red Flags of Loan Scams?
100% Guaranteed Loan Offers
If a lender contacts you first to offer guaranteed approval loans, this is most often a warning indicator of fraud. Borrowers are strongly discouraged from responding to such offers. Remember, a respectable lender would never call their clients and offer their services on the phone. So, if you come across such an offer through email, phone call, or in person, you are targeted by scammers attempting to steal your financial information.
Unsecure websites are easily identified: the website is unsafe if there is no "s" after "http" in the address or the padlock symbol. You should never provide confidential information to such websites. These lending platforms may be scammers attempting to steal your information or money, or the latter are unconcerned about the security of your data.
A reliable company will be concerned with having a correct and well-organized website with no typos or misspelled words. Scammers may purposefully misspell terms or names so that the victim does not realize it is part of their fraudulent scheme.
Good Loan Offers with Deadlines
Loan offers with deadlines are one of the apparent warning flags of loan scammers. In such a case, the lender declares you to move quickly. Nonetheless, be aware that no legitimate lender would put you under any pressure to make a loan decision on the spot.
The Bottom Line
Loan scams far often occur in various schemes as fraudsters seek new ways to carry out fraudulent actions. These unscrupulous lenders may obtain your personal information and numerous frauds, collect upfront fees, and disappear. Borrowers should thus pay close attention to the loan offer and study the loan agreement from beginning to end to ensure that there are no scams. We know that determining whether or not a loan offer is a fraud can be difficult, so before relying on an online lending platform or website, read online loan reviews and check their social media presence. Thus, if you don’t want to fall victim to loan scams NEVER:
Provide personally identifiable information to anyone who contacts you unexpectedly via email, SMS, or phone. For example, even if they use a bank's name, you may go to the main page of the bank's website and contact them to find out what's happening.
Click on the unknown links that came your way.
Sign documents of transferring your property to agencies claiming to repay your loan.
Pay upfront fees to lenders for processing your loan request.
When you know what these loan scams look like and how they work, you can avoid them.