Lending scams are out in force luring Canadians into parting with their hard earned money. Each month, we see new ways in which fraudulent companies are tricking consumers, including posing as LoanConnect itself! While there are many ways these scams are constructed, here are the 3 most common signs you’ve encountered a fake lender.
They Ask for Money Before Issuing the Loan
One absolute giveaway that you’ve encountered a lending scam, is being asked for money before receiving a loan. No legitimate lender requires money upfront for a loan. Never.
To be 100% clear: No matter how legitimate the reason, no matter what the explanation, if someone asks you to send them money to get a loan, they are running a fraud.
This scam is usually run by offering you a large loan, often with no credit check, and then asking you to purchase a pre-paid credit card as a ‘deposit’. Once you give them that prepaid card number, they will extract the money, and then disappear.
Never pay money to get money. Ever.
They Call You
If someone calls offering you a loan out of the blue, there is a chance it’s a lending scam. Keep track of every company you apply with, and make sure you only speak to legitimate lending companies you contact directly, or have already contacted. There are a number of lending companies that operate with a callback system, so receiving a call from a lender is not always a sign you are being scammed.
If you receive a call, and are unsure of the legitimacy of the caller, ask for their name and callback number. Any legitimate lender should provide this information to you freely and without any hesitation. If they do not, then trust your instincts and end the call.
A common scheme for illegitimate calls is to use a number that is very similar to yours. For example, let’s say my number is 555-782-9022; telemarketers (usually sketchy ones) will use a number like 555-782-9025. This is a tactic to get you to answer their call because the number looks familiar. This is a very recent, but widespread method scammers are using to trick people into answering their phones.
Easy Money, No Strings
The 3rd sign you have encountered a lending scam is being offered ‘instant approval’ for a (often very large) loan. No legitimate lender will offer you a loan over $1500 without a formal credit check. No one. If anyone says you’ve already been approved without completing a thorough application, that person is not being truthful and is almost certainly running a scam.
There are many payday lenders that do not require a formal credit check; but these will always be for amounts under $1500, usually between $400 and $700. Even then, legitimate online payday lenders will only offer you money once you have provided them with all your personal and financial information, including your banking information. If a lender says you don’t have to provide all that, walk away. Just as there are fraudulent lenders, there are also many fraudulent borrowers, and no lender would provide a loan without thoroughly verifying a borrower’s information.
Be Smart and Be Vigilant
As you’re reading this, there are new and inventive ways being hatched to lure hard working Canadians into applying with a fake lender. If you are looking online for loans, you are at a high risk of encountering a fraudulent lender, and that’s OK as long as you stay vigilant. If a lender doesn’t seem legitimate, or if you encounter any of the warning signs above, back away.
And always remember:
