How Do Loan Scams Work?
Loan scams are an unlawful practice that can result in identity theft and damage to a victim's financial history. Loan scammers always require an advance fee in order to secure the loan. However, it is illegal for any lender to charge any upfront fees in order to release the loan. Legitimate lenders are only allowed to add fees to the loan amount and to be paid overtime for the consumer's protection.
How Scammers Find Loan Scam Victims:
1. Scammers may purchase their leads from legitimate marketing websites. These marketing websites are not in the business of loaning money, which generally requires a license. They are simply professional-looking webpages offering loans to consumers and are very misleading.
Once the form has been submitted, the information generally is sold to a third party loan provider for a fee. Even if the loan website looks very professional and trustworthy, it may not protect your information from ending up in the hands of scammers. This information may include your home address, banking information, and social security number.
2. There are certain cases where scammers actually create their own loan application websites, although most of their websites look very unprofessional. These fake websites can be easy to detect by webpage errors.
Some red flags to look out for in illegitimate website design may include:
1. Newly purchased domain name
2. Domain name ownership protected by privacy.
3. Domain name hosted in a country other than where the service is offered
4. Not using HTTPS secure protocols, which is a must for any website collecting information.
Ok! They’ve Got My Info, What Do I Do Next?
At some point, scammers will try to get in contact with the person seeking a loan. Scammers will then offer a loan using very favorable terms, regardless of the victim's credit score.
The scammers will make victims believe that they’ve already been approved for a loan, but they must pay a fee up-front in order for the loan to be released. As a general rule of thumb – if the fee is required up-front, it’s a scam!
But here is the problem…
If you've been targeted by a loan scammer or have entered your information on such "loan" websites, the chances are that your sensitive personal information is in the hands of scammers. This dangerous practice can occur even if you didn’t get scammed the first time. Unfortunately, it is only a matter of time before identity theft occurs.
Consider Identity Theft Protection For Your Safety
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