The Bamboo Guide: how to spot (and avoid) loan scams

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Unfortunately, there are several individuals (and organisations) that are incredibly good at taking advantage of people and taking their money. Fraudsters, scammers and con artists have perfected their method of contacting, convincing and conning money out of people with their loan scams.

And, sadly, these fraudsters tend to target people who need a loan quickly (or are unlikely to have a variety of other options) in order to get money from you, or to steal and sell your personal information.

However, there are ways to spot loan scams and avoid them.

But, before we start, let’s do a quick breakdown of how loan scams work:

‘Advance fee’ loan scams: How do they work

There are several types of loan scams out there, but the most common is an ‘advance fee’ scam. In short, the scam revolves around you being asked to pay an up-front set-up fee. (Sometimes, they call these ‘transfer fees’ or ‘no guarantor’ fees, but it’s all the same thing – an attempt to get your money and give you nothing in return.)

The hook they use is that, as soon as you’ve paid these fees – which can range from £30 to £2000, according to Citizens Advice – you will receive the money.

But guess what?

That never happens.

Any attempt to chase, hunt down or find the scammer usually ends in disappointment – they’ve created a web of diversions and false trails to cover their tracks and keep them anonymous.

That’s why it’s so important to be 100% sure you’re not falling for a loan scam.

5 tell-tale signs that the loan you’re being offered is a scam

#1: You are contacted out of the blue

First of all, let us be clear: if somebody contacts you out of the blue, that doesn’t mean that they’re trying to scam you.

However, it does mean that you should proceed with caution – at least until you’re completely sure they’re legitimate.

Some legitimate companies contact customers out of the blue, but most don’t.

To make sure that you’re not being set up for a loan scam, ask the company details that they should know: your address, your repayment amount or your bank account details.

That way, there’s a chance you’ll catch the scammer out. (They should have these details to hand if they’re legitimate.)

If you’re still not convinced, hang up and call the company directly instead.

If they’re legitimate, they’ll have a record of contacting you.

#2: Does it seem too good to be true?

Ah, that old adage: if it seems too good to be true, it probably is.

Sure, that doesn’t apply to everything, but it’s pretty spot on for loan scams. Often, scammers will offer you incredibly low rates or offer to arrange a loan for you in exchange for a small fee.

Similarly, any person that says it doesn’t care about your credit history has no intention of lending you money. This is a huge red flag when you’re being approached about a loan – all lenders consult credit histories and your repayment history before making a decision.

#3: Their website isn’t secure

If you’re sent to the loan company’s website, make sure you look for https:// when you visit a website.

The s after http stands for security and means that the site has passed security tests and will keep your data and information safe. (The company has to pay for these checks too, so the s is independently verified and trustworthy.)

If there’s no s, don’t trust them.

#4: You’re pressured to act quickly

Any reputable credit or loan company won’t pressure you into making a decision. If you’re being pressured, they’re either a scammer or a disreputable lender.

Either way, you don’t want anything to do with them.

#5: Be cautious about paying anything upfront

According to Citizens Advice, loan scams often require an upfront payment. This is sometimes ‘to cover the insurance’, ‘to pay the first instalment and verify your details’ or ‘they need to pay somebody else to start the process’.

All of these should be huge red flags.

Teresa Perchard of Citizens Advice says:

“once you’ve parted with your money there is little chance of getting it back.

“We urge people to be very wary of signing up for loans that require a payment upfront – the chances are this is a scam.”

However, sometimes – even when a loan offer completes all of these checks – something still feels off. Our advice? Trust your gut.

Taking out a loan is a big decision that requires a lot of trust in your lender. If you’re not sure that your lender isn’t trying to rip you off, shop around and find a lender that’s right for you.

And, if you suspect a scam, call Action Fraud — run by the National Fraud Authority — on  0300 123 2040 straight away.


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