How to Recognize and Avoid Online Loan Scams

Did you know that over 2.3 million people file fraud complaints each year? This includes fraud from loan scams and other forms of identity theft.

These criminals continue to change the way they work and choose their victims, sometimes even going as far as trying to offer people fake job offers to those looking for new work.

Before you apply for any loan, there are a few things you should look out for. Please continue reading below to learn more about loan scams, how to avoid them, and how to find a legitimate online loan.

The Lender Reaches Out to You

Most common loan scams start with a phone call or an offer through the mail. If you receive a phone call or a letter stating you’ve been approved for a personal loan and you have to pay something to obtain it, that is a scam.

This is not to be confused with any advertisements sent in the mail. The FTC allows lenders to send you an ad with information about using their services, but it is illegal if the lender tries to make you apply and pay for the loan. 

Loan scammers often use the name of legitimate lenders names to try to make you think they’re calling from a reputable company. Make sure you double-check the information of the caller and the company before you sign up for anything. 

There Is No Physical Address

All reputable personal loan providers have a registered business name, phone number, and address. When a loan scammer reaches out to you, they may give you a false address that leads to a rural road or a random industrial building. If you notice that the address is not tied to a legitimate establishment, you may be facing a potential loan scam. 

Provides You With a Guaranteed Approval

Common loan scams tell victims they are automatically approved and guaranteed to receive a certain amount of money. No legitimate online loan will tell you the exact amount of money you’re approved for. Some legitimate online lenders provide an estimate of what you could receive, but none tell you that you automatically have a set dollar amount reserved for you. 

Tries To Steal Your Information

Personal loan scammers try to lure victims in with these types of loans so they can steal your personal information. Reputable lenders ask you for basic information to see if you qualify for the loan before they extend an offer. 

Information, a legitimate lender, asks for:

• Phone number
• Mailing address
• Social Security Number
• Household income
• Employment status
• Date of birth

An actual personal loan lender will ask you for this information well before they tell you what you’re approved for. Be careful about providing this information to a lender who already claims you’re guaranteed a certain amount. They may take your information and give you a false confirmation email saying they’ve sent you the funds. 

Who Is at Risk for Loan Scams?

Unfortunately, loan scammers do not care about you or about, your well-being or how stealing your information affects you. Their primary interest is taking your information so they can open false accounts or take money from you. 

A loan scammer’s main target is those with a lot of debt, bad credit, or the elderly. These individuals are very vulnerable because they need a loan for an emergency, and sometimes an online personal loan may be their only option.

If you desperately need a loan, be sure to double-check the information on the company. Loan service providers can only issue a loan if they are licensed to do business. If you are unsure if the company has a license or is a legitimate company, you can contact your state’s attorney general for more help. 

What To Do if You Fall for a Loan Scam

If you accidentally fall for loan scams, don’t panic. Just like you, there are thousands of innocent people who fall victim to these criminals, and there is a process you can follow to make a report. 

Gather Any Related Documents

If you have screenshots of conversations with the loan scammer, such as text messages or emails, make copies of them. Any form of documentation that proves the interaction between you and the scammer is good to have when you create an official police report. 

Fill Out a Police Report

With your documents in hand, give your local law enforcement a call to create an official police report. Your local law enforcement should have a department dedicated to fraud where you can create a report about what happened to you. 

Contact the FTC

As mentioned earlier, you can contact the Federal Trade Commission to inform them about this fraudulent activity. They will go over the information you have, and they can create resources for others, so they don’t fall victim to the loan scammer. 

Place a Fraud Alert on Your Credit Report

If you place an alert on one of the three major credit bureaus, the alert will automatically get posted on the other two. With this alert, creditors know that they must first verify your identity before issuing any lines of credit. Be sure to let the credit bureaus know to put a freeze on your account so that no creditor can access your credit profile unless you unfreeze it. 

Legitimate Online Loans

If you are in need of a legitimate online loan, make sure you do your research before you sign up with just anyone who claims to be a valid online lender. If anyone claims you have to pay them before you can receive a loan, you may be facing a loan scam.

Loan scams have the potential to ruin someone’s life financially and emotionally. Contact us for more information if you need a legitimate online loan. We are here to answer any questions or concerns you may have about loan scams and how to get the right loan for your personal needs.