Technology has made financial flexibility more accessible than ever before. Personal loans have become really simple and don’t require tedious documentation like they used to; online cash loans make it easy to access money at a fixed rate when you need it the most. They can be used to consolidate debt, pay off high interest credit cards or to recover after paying off a larger loan.
Even though technology helps to make life easier, it brings with it newer problems and responsibilities. Scammers and fraudsters are getting savvier by the day, making them really difficult to spot. Especially in these trying times when many Canadians are strapped for cash, scammers have been on the top of their game.
Identifying Cash Loan Scams On the Internet: Red Flags
Identifying loan scams is difficult, but not impossible. Simply keeping your guard up and staying vigilant can go a long way when it comes to dodging a scam.
Here are some red flags that you should watch out for when making loan transactions.
No Physical Address
If you have a bad feeling about a company, the first step you should take is to pull a quick background check. Give close attention to their name and physical address, if the latter is not mentioned, or if the company refuses to disclose their contact details, chances are that they’re frauds.
The easiest red flag to spot is a call, mail or text message stating that you’re pre-approved for a personal or payday loan that you never applied for.
Be vigilant of such messages especially if you haven’t made any requests. These unsolicited messages often lead to a loan scam and identity theft.
Requires Bank Account Details and Personal Information
No legitimate money lender will ask you for your bank details or personal details of any kind. Be sure to not provide any of this information as it could be a phishing scam.
Avoid lenders that only require your bank account information when doing their credit checks. Legitimate lenders always refer to a loan applicant’s credit report and ask for basic information.
No Credit Check
An immediate telltale sign of a scam is when lenders don’t require any credit checks. Reputable companies thoroughly scrutinize your credit score to verify your credit-worthiness and to assess whether or not you’ll be in a position to pay off your loan.
If the lender doesn’t require a credit check, chances are that they have no intention of sanctioning your loan to begin with.
Poorly Written Information and Bad Grammar
Bad grammar and poorly written information is a common warning sign. Most reputable companies and financial institutions hire intelligent people to design their communication and pay them well. Frauds usually take every chance they get to reduce operation costs for maximizing profits.
Requests for Payments Via Credit Card or Money Transfer
If a lender requests that you make loan payments / send money via money transfer or prepaid credit cards, cease all contact at once. Always make sure that the emails you receive about your loan applications are from legitimate lenders. Legal lending firms use business emails when communicating with loan applicants.
Most provinces in Canada deemed it illegal for loan companies to request an upfront fee before you can obtain your loan. Make sure that you are aware of your province’s laws on loan applications.
Bogus Terminology and Doublespeak
This is where scammers usually trick people; they often use corporate-sounding jargon like “administration fees”, “processing charge” or “credit protection fees”, making the borrower think that they’re being protected when in reality, these names are meant to mislead you.
Always ask questions and test the legitimacy of your lender, if you’re feeling uncomfortable, doubtful or pressured, simply cease contact. It’s good practice to not venture into something you don’t have a good feeling about, especially when it involves money.
What to Do if You Fall for an Online Loan Scam
It is a tough world we live in; many families and businesses constantly seek ways to sail through their financial difficulties. Situations like this leave people desperate and vulnerable to scammers who often bury their victims in thousands of dollars’ worth of debts The unfortunate truth is that they’ll always be around. We’re going to have to find ways of dealing with them.
Reporting the Scammer
The first and foremost step you must take after coming across loan scams in Canada is to report them. Doing this will save a lot of trouble for other people looking for personal loans. The best way to report a scam in Canada is through the Canadian Anti-Fraud Centre.
Retrieving Your Funds
Getting your money back is a very distant possibility. Even if you report the scammer on time and they’re sloppy enough to be caught, the chances of getting your money back are slim.
Share these tips with friends and family to keep them safe in these trying times.