Online lenders are targeting New Brunswickers to offer them fraudulent loans, FCNB warns.
While many online lending options may be legitimate, there is also a rise of scam artists offering fake loans to unsuspecting consumers.
How the Advance Loan Scam Works:
A consumer applies for a loan and it seems to be approved or guaranteed. However, when the consumer contacts the company to receive the funds, the company requests a fee (such as a deposit or loan insurance) before the funds will be transferred.
Once the scam artist receives the payment from the consumer, they disappear. Their contact lines are disconnected or they simply ignore consumer inquiries. Often the website is shut down only to reappear under a different name so the scammer can continue to target unsuspecting consumers and avoid being pursued by law enforcement.
Victims of the advance loan scam report that the websites appear legitimate. For example, they may display a licensing number, a tax number, or incorporate digital signature technology on their platform to give it the semblance of being real.
In these situations, the names of the company targeting consumers may change but the scam remains relatively similar. It’s important to know the red flags of this scam.
How to recognize a loan scam:
- You’re asked for a fee or deposit before receiving the funds. According to the Canadian Anti-Fraud Centre, it’s illegal for lenders to request a deposit before the loan is given. If a lender asks for advance funds to “secure” or “confirm” a loan, it’s a scam.
- You’re contacted out of the blue by phone or internet. Unsolicited loan offers may be legitimate, but proceed with caution.
- You are guaranteed a loan or interest rate regardless of your credit history. Legitimate lenders use your credit history to determine if they will lend you money, and at what rate.
- You’re asked to send payments using gift cards such as iTunes, or wire transfer service such as Western Union.
What to do if I suspect a loan is a scam:
- Do your research. Scammers use names that sound like legitimate company names, to try and trick you into feeling safe. If you’re unsure, do an internet search for the company name followed by the word scam. If you see many results attesting it’s a scam, tread very carefully.
- Often, fraudulent sites will display a page about their “board of directors”, but steal the pictures of the board members from other, legitimate websites. A reverse image search can help you determine if their board members are really who they claim.
- Verify the company exists. Get a physical address that you can verify or get the company’s contact information from directory assistance or the phone book.
- Be cautious of lenders that are based outside of Canada, because if it is a scam, it will be particularly tough to get your money back.
- Be careful where you share your personal information. If you do not trust the website or company and if you can’t verify that it is legitimate, do not share sensitive information.
- Even if documents appear legit, tread carefully because it’s easy to fake “official” looking paperwork.
- Remember, just because they advertise through a recognized media outlet such as Facebook, does not mean the company is legitimate.
- Report it with the RCMP. They may already know about this and tell you whether a company is fraudulent or not.
Where to report loan scams:
Report online loan scams to the RCMP.
Being informed is the best way to protect yourself from frauds and scams. Learn more about how to report fraud and where to report fraud.
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