If you are looking for a loan online, be aware of the latest scam. Some criminals are using fake loans to steal money from unsuspecting families, making them financially even worse off. You should always use a trusted and reputable loan provider to make sure you avoid online loan scams.
What Is the Latest Fake Loan Scam?
The fake loan scam is a type of online scam that is part of a group known as 419 scams, also known as advance-fee scams. You can find an example of an advance-fee scam by watching this BBC video.
Online fraudsters will create fake accounts and even a fake website to imitate a reputable loan provider and offer loans to individuals and families. But the catch is individuals need to pay some sort of fee in advance, typically an application fee or a fee that doesn’t exist in the legitimate loan industry.
Once the fee has been paid, the loan provider or agent you were speaking with will completely disappear – and so will your money.
Online scams of this nature have been on the rise during the pandemic as more families struggle to keep up with payments and require financial assistance. The BBC reported this rise in scam cases since the pandemic began in the UK, stating that a fake NHS advance-fee scam had targeted some people
How Common Are Fake Loans Online?
Advance-fee scams make up a large proportion of online scams in the modern age. Wonga recently cited data from South Africa that around 33% of people who fell victim to an online scam were tricked by an advance-fee scam.
This does include other advance-fee scams such as fake lottery wins and fake inheritance collections, but it shows that fake online loans are part of the big problem too.
How to Spot Fake Loan Scams
Fake loans offer amazing interest rates. And why wouldn’t they when they don’t actually exist.
This is one way that fake loan scammers try to hook desperate families into signing up, and subsequently losing some of their money. If you find a loan provider online offering interest rates well below the market average, you should be immediately suspicious – even if their website looks legitimate.
Another way to spot them is they contact you to ask if you need a loan. No legitimate loan provider does this.
How to Avoid Fake Loans Online
You can prevent being caught out by doing extensive research on the company you are about to use and simply avoiding any internet loan providers with rates that are too good to be true.
You can still get a loan from a reputable online creditor regulated by the relevant industry body. But stay away from anything suspicious and do not interact with people who contact you first.