Fraud Education – Online Loan Scam

Online Loan Scam

A loan scam is a loan offered under false pretenses. The scammer will use fake company logos, phony caller ID numbers, and other scam techniques to impersonate legitimate loan companies.

What is the scammer trying to gain? 

  • Social Security Numbers
  • Credit/Debit Card Numbers
  • Online Banking Credentials
  • Account Numbers

There has been a spike recently in fraud cases from consumers applying for loans online. The consumer gives the scammer their online banking credentials to deposit “loan proceeds” into their account. The scammer may also activate a cell phone tied to the consumer’s mobile banking account and use mobile deposit for fraudulent checks, which the consumer assumes is “loan proceeds”.   

Watch out for these potential red flags:

  • Method of payment – Real loan companies will not ask you to make payments with gift cards or by sending funds directly to an individual.
  • Guaranteed approval – Legitimate lenders will do their due diligence to assess you as a borrower. Most lenders have several requirements that you’ll have to meet in order to qualify, including a minimum credit score, proof of income, and more. A company advertising guaranteed approval is likely running a scam.
  • Upfront costs – Payments should not be due prior to receiving loan proceeds. A legtitimate loan company will not ask for part of the proceeds to be sent back to them.
  • Fund origination – If the payor on the check does not match the name of the loan company that you’re working with, it’s likely a scam.
  • Pressure to act fast – Scammers often create a false sense of urgency and pressure their victims to act immediately. You should never make financial decisions under pressure.
  • Contact method – Email and social media are the top contact methods for scammers because they can contact a large amount of individuals at once. Do your research and look up information on the loan company. Often, you can catch potential scammers with your search results.
  • Deposit instructions – Scammers will try to get fraudulent checks past financial institutions by asking for you to use mobile deposit or ATM deposit. Remember: if you deposit a fraudulent check, you will be liable.

NEVER give your online banking credentials to anyone. A legitimate loan company will not ask for your credentials to deposit proceeds. If you give someone your credentials, they can gain access to all your personal banking information. When in doubt, contact your financial institution for assistance. They will be able to offer help, including how to monitor your credit or file a report with the Federal Trade Commission (FTC). Give all the details about the situation and don’t leave anything out, regardless of what you have been told to say. If someone is coaching you on what to say, it’s likely a scam.