During times of crisis, the number of scams targeting vulnerable Australians markedly increases. Scammers see a moment of vulnerability and decide that it’s an invitation to act. Any type of financial related scam can leave lasting effects for years and severely damage ones mental and financial health.
If you’re seeking a personal loan, it’s important that you are only engaging with institutions that provide safe personal loans – free of deceptive or scam-like behaviour. Even tech and financially savvy individuals can fall for loan scams. This article will educate Australians on how to avoid the most common loan scams being conducted right now.
How Do I Know If a Private Lender is Legit?
In 2020, ASIC received a record number of complaints of individuals impersonating private lending firms in order to deceive the vulnerable.
There are several ways in which you can ensure that a private lender is legit and not going to scam you. All these strategies have been endorsed by ASIC, however, they are not foolproof and it’s important to always do your own research outside of our suggestions.
- If you receive an email from a private lender that says you are approved for a loan or any other financial product, check the email address before engaging with the sender. Scammers will likely use email addresses that end with @outlook.com, @gmail.com, or @mail.com. If the email is legit and from an actual private lender it will have a custom domain and often say the senders name followed by their company name.
- Ensure the company sending you the email has a website
- You will never have to make a payment for insurance or tax prior to having access to loan funds – if you are asked to fulfill this then you know it’s likely a scam.
- Most loan companies will conduct ID verification automatically and will not require you to manually send in your documents – if asked to do this be extra careful and conduct some extra due diligence before handing the information over.
Personal Loan Fraud
One of the biggest personal loan frauds/scams happens to those who aren’t even in the market for a loan. If your personal data is stolen in anyway, whether that’s through another scam or computer hack – an individual can apply for a loan on your behalf and get the money deposited into their bank account.
The financial institution where the loan was issued will then chase you for the repayments of a loan you didn’t even know existed. The impacts of this type of scam can be devastating – essentially, you are the victim of identity fraud.
If the scammer opens personal loan accounts in your name and defaults on them, you’ll get a negative credit report and if this is not reported soon enough it may stay on your record for up to 5 years.
This will impact your ability to get access to ANY sort of financial product in the future. The best way to prevent this type of scam is to regularly check your credit report – if there is an enquiry you don’t recognise, you must report it right away.
What do I do if I get scammed by a loan company?
Firstly, we must set expectations of outcome here – it’s unlikely you’ll get your money back but there are actions to be taken to limit further damage. Together, we are going to run through a list of different things that can be done to let the proper authorities know you have been scammed.
- Contact People You Know
Reach out to those closest to you – whether they are business or personal associates, its important you get the word out. Ensure they don’t fall for the same scam and make sure they are there to support you during the road ahead.
- Contact Your Financial Institution
Possibly the most important step if you’ve exchanged funds already with the scammer. They may be able to stop the transaction and close the account if your details have been compromised. Banks can also complete chargebacks on credit cards if yours was billed fraudulently.
- Report The Scam to Authorities
We encourage you to report any loan scams in Australia to the relevant authorities. In this case it could be the ACCC or ASIC. Visit the government website, scamwatch, to get each departments contact information.
- Change Your Passwords
If you believe the scammer may have access to your online accounts, it’s imperative that you change your login details. Ensure that your new password is randomly generated and impossible to guess – this will leave the scammer with no access to your accounts to cause future damage.
- Reach Our For Support
Being scammed by a loan company is embarrassing and can cause distress to some victims – it may be smart to reach out to a counselling or support service that specialises in assisting victims of financial crime.
What To Look For In A Trustworthy Loan Company
So, you’re in the market for a personal loan and want to know the tell tail signs of a trustworthy lender?
The most telling sign that a lender is trustworthy is if they have a registered ABN and ACN – all financial companies in Australia are also required to be registered with ASIC. Visit their website and use their lookup feature to see if the lender you are dealing with appears.
Fundo is making small personal loans easy – get access to $2000 in a short time frame with incredibly flexible repayments. We want you to Enjoy Now and Pay Later. With thousands of 5-star reviews – you can be sure to trust the passionate team at Fundo. Visit our FAQ page to learn more about how we are helping Australians nationwide.
Disclaimer: The opinions expressed in the Blog are for general informational and entertainment purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific investment product. It is only intended to provide education about the financial industry. The views reflected in the commentary are subject to change at any time without notice.