The internet has made it easier than ever to apply for loans and obtain them. Unfortunately, this convenience has also given rise to a growing number of loan scams and fraudulent activities. From loan fraud to identity theft, people need to be aware of the risks associated with online lending. And need to take precautionary steps to prevent loan scams.
In this article, we will discuss the types of online business loan scams and explore how you can protect yourself from such scams. Additionally, we will delve into loan apps and provide tips to protect your identity and personal information.
IN THIS ARTICLE
Can Someone Use Your Identity To Take Out a Loan?
Identity theft is a prevalent issue that can have a significant impact on the victim’s credit rating, financial stability, and overall well-being. Thieves can utilize stolen personal data to apply for various forms of credit, such as loans and credit cards, in the victim’s name.
During the application process, the perpetrators will furnish the required personal information including name, address, social security number, and income details. Upon approval of the loan, the lender will disburse the funds to either the thief or their nominated account.
Failure to repay the loan can have severe consequences, including legal action taken against the victims, which can further harm their financial situations. One should keep an eye out for personal loan frauds, and find out a solution for being safe.
Is Loan Fraud Really That Bad?
Loan fraud is a substantial problem that may bring harm to individuals as well as to the economy. Victims can experience financial harm, such as a damaged credit rating and challenges in obtaining credit in the future.
Furthermore, loan fraud can contribute to an increased cost of goods and services, as well as higher interest rates, affecting the vasteconomy. Perpetrators of loan fraud can face legal consequences and victims may suffer emotional distress. To prevent loan fraud, individuals should take steps to protect their personal information and be alert to any signs of fraudulent activity.
This question is pertinent in the sense that it affects everyone. This problem is not only limited to loaning agencies, or Governments, or even banks. It is seen as a Federal offence and the defendant could be subjected to probation, fines, or something as extreme as imprisonment.
A con artist could very easily open a legitimate business, car loan, or home that you would be responsible to pay for. The minimum a thief could do is take out multiple payday loans in the victims name. One should be very alert about who has the access to your account.
There is a reason why loan scams are difficult to keep a track off. One of the reasons for this could be if the fraudster functions and operates from a different place all together. The other could be the use of change-of-address fraud that gives access to emails.
Loan scam emails may be the way to nab the thief. There is a sense of morality attached to scamming individuals for obvious reasons.
Loan Apps: How to protect yourself from such scams?
In recent years, loan applications have gained significant popularity but unfortunately, some of them are scams. The following measures can be taken to guardyour funds and to check if the loan company you are dealing with is legitimate or not.
- Conduct a thorough investigation of the loan app before installation or use. Analyze feedback, and ratings, visit the app’s website, and authenticate the licensing and contact details of the company.
- Carefully go through the permissions requested by the loan app during installation. Avoid them if it demands access to confidential data such as contacts, locations, or messages.
- Refrain from sharing personal information unless you are certain about the legitimacy of the loan app you are depending on.
- Scrutinize the terms and conditions of the loan app before giving your consent to them.
- Be aware of the interest rates, repayment policies, and all the charges associated with the loan.
- A legitimate loan app never charges a fee before loan approval. Therefore, it is advisable to exercise caution before trusting any loan app that asks upfront fees.
- Ingenious hackers can acquire your personal information through wifi networks. So it would be wise to use loan apps on a secure network.
In the last couple of years, all transactions conducted are in the online world. This cuts down on the efficiency and delay in the offline setup. The money managing preference has also witnessed a drastic shift. Digital transactions offer the advantage of cashbacks and other perks.
The process of obtaining loans has become slightly easier with the help of certain online platforms. The options are presented to a person who then judges if a particular loan is suitable for one’s situation or not.
Types of Online Business Loan Scams: How to be safe online
Business loan scams have become customary these days. People need to be aware of various types of online business loan scams to protect their financial resources. Some common ways how loan scams are carried out are discussed below,
- Upfront fee scams: Upfront fee scams involve perpetrators requesting a prepayment from the loan seekers prior to disbursing the loans. Unfortunately, these con artists do not fulfill their promises of providing the loans, causing the borrower to suffer financial losses in the form of the upfront fee paid without receiving the anticipated loan amounts.
- Phishing scams: The scams involve perpetrators assuming the identity of credible lenders or loan providers and soliciting the loan seekers’ personal and financial accounts. It is done through electronic scam emails or text messages. They then use the information they proclaim to perpetrate activities related to identity theft.
- Fraudulent websites: Tricksters create counterfeit websites that mimic the appearance and characteristics of authentic loan providers and trick borrowers into sharing their private information. Moreover, the fraudulent websites may require payment of an upfront fee for loan approval, resulting in monetary loss to the loan seeker without any eventual receipt of the loan amount.
- Loan Broker scams: Loan broker scams involve the unethical practice of charging exorbitant fees to borrowers while falsely promising to secure the most favorable loan options. However, in reality, these brokers provide loan options with unfavorable terms and conditions that are unsuitable for the borrowers.
If you encounter any of these, know that you are getting scammed by a fraudulent loan company. People can protect themselves when seeking business loans online by researching loan providers, verifying their contact information, avoiding upfront fees, using secure websites, being cautious of unsolicited emails or messages, and asking for a written agreement outlining loan terms and conditions.
These precautions help reduce the risk of falling victim to online loan scams and ensure informed decisions about borrowing money online.
How prevalent are loan scams in the USA and Canada?
Loan scams are unfortunately prevalent in the USA and Canada. The US FTC received 2.2 million fraud reports in 2020, resulting in $3.3 billion loss to fraud. Canada’s CAFC reported 46,465 fraud cases with a loss of over $84 million.
Which loan apps are scamming loan companies?
Here is a list of fake loan apps,
- Cash Ray App
- Infinity Cash App
- PP Money App
- Rupees Master App
- Mobipocket App
Can loan companies contact your bank?
Loan companies can contact your bank to verify your financial information and access your creditworthiness while approving your loan application. Additionally, they may contact your bank for automatic deduction of loan payments from your bank accounts.
Where can I file a personal loan fraud complaint?
The Federal Trade Commission is the primary agency to lodge a complaint regarding personal loans. Also, you can resort to Financial Fund Recovery which will help you recover your fund lost to a loan scam.
“Loan fraud: where the interest rates are too good to be true and the consequences are too real to ignore.”