When you need to borrow cash, the last thing you want to encounter is a fraudster plotting to steal money from you. But as people increasingly shop for\u00a0personal loans\u00a0online, scammers are ready to take advantage.<\/p>\n
Consumers reported losing nearly $8.8 billion in losses to fraud in 2022, according to the Federal Trade Commission. Those reports included imposters and scammers claiming to provide loans in exchange for information or money.<\/p>\n
\u201cSeparating the legitimate lenders from the fakes can be really hard, and the scammers get better every day at making their pitches look more convincing,\u201d says John Breyault, vice president of public policy, telecommunications and fraud at the nonprofit National Consumers League.<\/p>\n
Before you provide personal or financial information, here are five signs the loan you\u2019re considering may be a scam.<\/p>\n
An out-of-the-blue robocall or text message inviting you to apply for a loan should give you pause, especially if you\u2019ve had no prior contact with the lender.<\/p>\n
The borrower usually makes the first move to\u00a0get a personal loan\u00a0by pre-qualifying or directly applying. In some cases, your bank or credit card issuer may send you a preapproved loan offer or an online lender may send follow-up emails after you check for offers with them.<\/p>\n
But if the message makes you wonder how the lender found you, don\u2019t trust it. Delete suspicious text messages and hang up on robocallers, Breyault says. Even saying \u201cdon\u2019t contact me\u201d could signal that you\u2019re likely to respond, so the calls and texts may persist.<\/p>\n
Related<\/strong>: Scams against seniors soar, costing some their homes and retirement accounts<\/p>\n A trustworthy lender can\u2019t guarantee you\u2019ll get a loan without reviewing your credit and finances, so avoid those that promise approval before you\u2019ve even applied, Breyault says.<\/p>\n \u201cAny legitimate lender is going to want to do a credit check on you to know if you\u2019re going to be able to pay them back,\u201d he says.<\/p>\n A\u00a0high-interest lender\u00a0may provide a loan with no credit check, but many at least do a soft credit pull and review your bank accounts before approval.<\/p>\n Don\u2019t miss: <\/strong>Thieves can empty your bank accounts if you\u2019re still using this outdated payment method<\/p>\n Lenders are required by law to register in the state where they do business.<\/p>\n So if you have doubts about a lender, check to see if it\u2019s licensed. The Consumer Financial Protection Bureau (CFPB) maintains a list of\u00a0state bank regulators, and the National Association of Attorneys General has a\u00a0list of states\u2019 attorneys general, which are good places to start your search.<\/p>\n Just because a lender posts a license on its website doesn\u2019t mean it\u2019s real, Breyault says, so it\u2019s best to confirm.<\/p>\n If you can\u2019t find the license, treat it like a red flag and report it to your state regulator, says Suzanne Martindale, senior deputy commissioner for the consumer financial protection division at the California Department of Financial Protection and Innovation (DFPI).<\/p>\n Research a lender\u2019s online reputation to confirm (or quell) your suspicions. Enter the company\u2019s name into the\u00a0CFPB\u2019s complaint database\u00a0and the\u00a0Better Business Bureau\u2019s directory\u00a0to see what others are saying about it, Martindale says.<\/p>\n You can also search online for the lender\u2019s name and the word \u201cscam,\u201d which may surface regulatory actions against a legitimate lender or links to the community website Reddit where other people have shared their experiences. Even California\u2019s DFPI uses Reddit to research companies, Martindale says.<\/p>\n \u201cOnline communities do tend to form when there have been red flags, and so it does pay to slow down, think before you click and do a little online research,\u201d she says.<\/p>\n Plus<\/strong>: It\u2019s easy to get duped out of thousands of dollars by this bank scam \u2014 how to spot it and avoid it<\/p>\n Legitimate lenders never require payment in exchange for a personal loan. Personal loan scammers may request an Apple \u201cThe fact that you\u2019re being asked to pay is a red flag,\u201d he says, and \u201cthe fact that you\u2019re being asked to pay in an unusual way is a really big red flag.\u201d<\/p>\n You might like:<\/strong> An immediate use for AI? Fighting financial crime.\u00a0<\/p>\n Learning you may have been swindled can leave you feeling embarrassed and frustrated, but keep in mind that people make millions of fraud reports each year.<\/p>\n Here are some steps to take if you suspect you\u2019ve been scammed, and ways to find the cash you sought in the first place.<\/p>\n2. Advertisements of \u2018guaranteed\u2019 approval<\/strong><\/h2>\n
3. No state registration<\/strong><\/h2>\n
4. A bad online reputation<\/strong><\/h2>\n
5. Asking for money or gift cards<\/strong><\/h2>\n
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\n Play gift card, or payment via an app like Venmo, Breyault says. Recently, payment requests via cryptocurrency have also become common, he says.<\/p>\nWhat to do if you\u2019ve been scammed<\/strong><\/h2>\n
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