Various financial frauds have increased as a result of the recent pandemic. Loan scam was one of the most common types of fraud that emerged during that period when people required immediate funds to meet medical or other needs.
Digital and technological advancements have been a boon to the financial services sector, but they also present perilous challenges that a layperson may find difficult to identify, let alone avoid.
Using the benefits of digital technology, scammers can conceal their true identities behind the anonymity of the internet to impersonate legitimate businesses and hack into people’s accounts to commit financial fraud.
A further catalyst was the unprecedented COVID-19 pandemic, which caught everyone off guard. Many people became more vulnerable as a result of their lack of financial resources to deal with the crisis.
Fraudsters took advantage of this helpless situation to offer fraudulent loans disguised as easy and instant funds with no documentation.
Potential borrowers must become aware of loan scams and learn how to spot them in order to avoid financial losses and mental anguish. Below are a few tips that we have for our readers.
Identifying Loan Scams
1. Unprofessional Communication
Loan Scammers are usually very unprofessional and one can easily understand the way they talk over the phone.
A loan scam’s goal is to obtain your personal and financial information in order to steal your money. They may pose as representatives of reputable financial institutions but don’t get any training in communication skills.
But keep in mind that no authorised entity will call you or send you unsolicited communication to gather your confidential financial and personal information under the guise of loan offers.
2. Seeking Refundable Advance Funds
The most obvious sign of a loan scam is when a company offers you easy loans in exchange for an upfront payment that is referred to as a refundable processing fee, GST charges, or insurance fee. If this happens, run away immediately.
No legitimate or authorised financial institution will ever ask you for money in advance before making a loan payment. If a processing fee is charged, it will be deducted from the loan amount before it is credited to your account.
4. Establishing A Sense of Urgency
A loan with a ticking clock and lender pressure to act quickly is yet another sign of a personal loan scam. Genuine lenders and companies do not make a limited-time offer and give the individual enough time to decide.
5. Unheard Company Name
People must check the identity of the company offering loans through their official websites or visit their branches to avoid falling into a fraud trap.
Before sharing your confidential financial and personal information over a loan offer-related advertisement that you may see on your Facebook page, YouTube page, or even in your local newspaper ads, always conduct thorough research on the company’s credentials.
6. Loan Approval Guarantee
Any loan advertisement that states, ‘loan approval guaranteed,’ should be avoided. A loan that is guaranteed does not exist. Loan approval is dependent on a number of factors, including your credit history and information verification.
In Case of A Loan Scam
- Don’t panic or abandon such fraudulent scenarios.
- Maintain documentation of your communications in order to provide supporting evidence when filing a complaint.
- Customers should never leave their mobile numbers, ID proofs, or address proofs on social media platforms or websites because they can be used fraudulently.
- Inform your bank or financial institution about the situation.
- Complain on the Cyber Crime website at https://cybercrime.gov.in/ or call their 24×7 Helpline 1930, which was previously 155260.
- You should even go to your local police station and file a FIR.
We suggest our readers always be on the lookout for new loan scams and other types of fraud. To help others, share your experiences and learnings with your friends, family, and society.
They should be cautious when applying for loans. In any financial transaction, only deal with reputable and legitimate financial institutions.
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Our team at Wisdomganga is constantly working to recognize all the possible scams and is focused on making everyone aware of them. If you find this article useful then you can now order a cup of coffee for our team as a token of appreciation.