Loan scam is a kind of advance fee fraud whereby a scammer pretends to be a licensed money lender, bank, government or non governmental organisation and asks an unsuspecting victim to pay an upfront fee to get a loan. It usually begins with unsolicited calls, emails, text messages or direct conversation with the intended victim. Some scammers also use the strategy to obtain personal information of victims and use it for fraudulent activities.
Once a fee is paid, the scammer disappears or refers the victim to a second or third scammer. Alternatively, he may request for another fee to cover insurance, legal fee, cost of transfer of the amount in question or other miscellaneous expenses.
Due to the current global Covid-19 pandemic, scammers are taking advantage of the global lockdown to defraud desperate loan borrowers that are looking for available opportunities to overcome their financial challenges. Many people are falling victim on daily basis. According to a report by Singapore Police Force, between January and April 2021, at least 20 reports were received with losses amounting to more than S$200,000.
However, a safe way to avoid a loan scam is to watch out for the warning signs.
Warning signs of a loan scam:
1. It begins with unsolicited calls, email, text message, social networking message etc.
2. The site may not be secure with “HTTPS”. In most cases it is “HTTP”.
3. You are urged to respond immediately before a particular deadline.
4. There is no physical address or the address is not traceable.
5. No proper legal agreement between the lender and the borrower.
6. The lender’s registration with the government cannot be verified.
7. Persistent calls, emails and text messages from the lender.
8. In most cases, it sounds too good to be true.
9. Request for upfront payment.
10. Multiple advertising media.
How to avoid a loan scam:
1. Don’t be too desperate to get a loan.
2. Make sure the website is secured with HTTPS.
3. If it sounds too good to be true, be suspicious.
4. If you are contacted out of the blues, be suspicious.
5. Make sure the company is registered with the government.
6. Investigate thoroughly before you enter any agreement with the company.
7. Be suspicious of money lenders with multiple advertising media.
8. Don’t depend on online agreement. Visit the money lender’s office with your lawyer.
9. Before you apply for a loan, contact a professional for proper counseling.
10. Make sure the company is affiliated with a reputable financial institution.
11. Don’t provide your bank details to a money lender that contacted you through unsolicited calls, emails or text messages.
12. If you are suspicious of a money lender after entering an agreement with him, withdraw the agreement immediately.
13. If you have already fallen victim to a loan scam, make sure you report immediately to the appropriate authorities for proper action.
Rotimi Onadipe, CEO- Onadipe Technologies and National Coordinator- Internet Abuse & Crime Prevention Project.
