As stated by Dan Gilbert (@DanTGilbert), a well-known professor of Psychology at Harvard, “Some borrowers are pretty good at frauds,” . While this is true, online lenders might as well scam borrowers in all sorts of ways.
Although the the lenders themselves provide less information on the scams related to borrowing money, the truth is that online identity theft has increased, and it happens daily.
“I get scammed on a daily basis. Even if I don’t get tricked, online fraudsters keep on attempting to do so,” says James Altucher (James Altucher) who has written more than 20 books, founded more than 20 companies and is also an contributor to the Huffington post and the Financial Times.
One of those online scams is the identity theft where the fake lenders impersonate themselves as legit financial providers to trap the misinformed borrowers.
The Warning Signs That Need to Scare You Off
There are warning signs which you can observe from your lender to avoid being scammed. Here are some of them:
- Many email messages constantly urging and reminding you to apply for any loan
- Email messages which contain several grammatical mistakes such as spelling errors, punctuation, and capitalization
- Lender asking you to deposit some cash so that you can get the loan
- An interest rate which is too low as compared to the regular market rates
- A large grace period of more than one year before you start making your loan repayments
- When the company argues that they don’t perform any credit checks on the borrower, irrespective of their past or current financial status
- When the borrowers are urged to make the loan borrowing decisions quickly so that they don’t miss out on the loan offers
- Receiving many calls with different numbers form the same lender
Tips for Avoiding Online Identity Theft From Lenders
To avoid getting scammed through identity theft, do these simple checks before you engage into any borrowing activity:
- Check the payment requirements
Ask your lender if they accept the advance payments. If they say yes, take that as a red flag. This is because the legitimate financial lenders do not disclose their upfront fees as they opt to deduct them from the loan you get. So, don’t be fooled by a lender who tells you that the upfront fee you pay will guarantee you a loan.
- Check the history of the lender
Go through your lender website to see how long they have been in the market. The best lender should not only have been providing the services for a long time but also have some reviews from satisfied customers. While investigating the lender, check out their contacts and see if the state authorities registered the business or company.
- Get a professional review
Take your loan agreement to your lawyer for expert review. If the contract is a mere scam, your lawyer will be able to detect that and tell you to avoid it. Also, don’t be rushed. Take it as a warning sign if your lender rushes you to sign several online papers while encouraging you at the same time to make the application.
Consider Other Aspects
- Don’t reveal your personal information such as your social security number before you’re at the stage of signing the loan agreement. You might be later surprised to realize that your file has been compiled with extra charges and probably your identity has been stolen.
- Don’t rush to sign anything that you have not understood well, irrespective of how good the deal seems to be.
- Avoid the deals which look too good to be true. For instance, someone may promise to give you a significant amount of money with little or no interest. Avoid such deals.
- Don’t assume that the professional looking website is legitimate. The most sophisticated scammers use appealing sites and complete them with well-crafted articles to create an original appearance.
- Beware of the credit companies whose names mimic the well known financial institutions and lenders. Most of them are scammers, and they hide under those companies.
What to Do If an Online Lender Has Scammed You?
“Identity theft, corruption, and frauds are everywhere. It’s hard to avoid getting scammed nowadays,” affirms Allan Greenspan (Allan Greenspan). If you have been unfortunate enough to be scammed, you can report the identity thefts to the concerned authorities. Here is how to report the scam:
Better safe than sorry. Don’t let your need to have the loan drag you into the wrong hands. Learn the warning signs and protective measures to avoid becoming a victim.
Daniel Gilbert (@DanTGilbert) is an American author and social psychologist. He is the Edgar psychology professor at the Harvard University.
James Altucher (James Altucher) is an American entrepreneur, top-selling business author podcaster and venture capitalist. He has written more than 20 books, founded more than 20 companies and is also an active contributor of the Huffington post and the Financial Times.
Allan Greenspan (Allan Greenspan) is an American investor and economist. He is the former chair of the United States Federal Reserve. He is also a top business author.