It is tragic when people seek assistance only to be exploited by those who claim to help them. This lies at the root of some of the most heartless types of scams, such as charity scams, frauds that rob people of unemployment benefits, or social security checks and loan scams.
Many people today are suffering from poor credit and are not able to get a regular loan from a bank. In their desperation, they may seek out other means of paying the bills and fall victim to loan scams.
In this risky environment, you need to stay safe with any financial service. Trader Defense Advisory experts will help you evaluate whether an opportunity is legit or fake. If you have lost money to a loan scam, contact TDA experts who are experienced in dealing with all types of scams and can help you seek redress for your claims.
Loan scams take various forms but operate on the principle of taking money from people when they promise to help them with funds. They may do this by charging a fee upfront and disappearing with the money or charging very high-interest rates.
When people think of loan scams, they may imagine vicious loan sharks from the movies and the kind of people who threaten violence if loans aren’t repaid. Although these criminals are all too real, not all loan scams involve physical violence or seeking someone out at their place of residence.
Many people who perpetrate loan scams are satisfied simply with stealing personal data online and do not need to make any violent threats to get their money. They simply need some expert hackers and they can gain access to victims’ funds.
According to the Federal Trade Commission, consumers lost $3.3 billion in fraudulent practices in 2020, and this trend is likely to continue. Much of this money was lost to loan scams as a record number of people were unemployed or underemployed as the result of the COVID-19 pandemic. This caused people to scramble for loans when they couldn’t get approval from their banks.
Additionally, student loan debt and credit card debt reached staggering proportions in the US even prior to the pandemic. Many people get into the vicious cycle of taking out loans to pay off other loans. Like gambling, taking out loans can be a kind of addiction and a supposed quick fix to try to get out of the kind of financial peril that requires long-term solutions.
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Loan scammers have various methods. They can be in-person or online but they often share common telltale signs. One sign of a loan scam is that the fraudster will seek people out, sometimes aggressively, through spam emails, cold calls, or on social media.
They will advertise their service to people with bad credit and will guarantee them a loan.
For this service, they will charge a fee. Sometimes they will ask for the fee upfront through bitcoin or a pre-paid debit card. Accepting only these payment methods is a red flag because they provide anonymity and make it difficult to recover funds later. After the scammers have collected the upfront fee, they will usually disappear.
Many loan scams do not ask for the fees upfront and try a bit harder to masquerade as a legitimate service. They will take part of their fees from the loan once it is given. It can be hard to tell this type of loan scam from a legitimate service because often real loan agencies will subtract their fees from the total loan. The difference is that these fees are extremely high.
Also, they may claim to be working through a bank or another financial institution and simply be making the loan themselves at exorbitant fees. They may even charge the interest themselves and constantly revise the interest rate upwards. They could even visit your house and threaten you if you are late in repaying. Owing money to these types of loan scams is a nightmare and it is important to involve law enforcement and government agencies if you feel unsafe.
Loan scams often have obvious signs and red flags. The problem is that many consumers who fall for them are aware of these risks but they may feel so desperate they may tell themselves they are willing to take the risk or pay the high commissions and interest rates.
Their justification is that they fear bankruptcy, but in truth, bankruptcy can be a preferable scenario to getting stuck in a loan scam with harsh interest rates, particularly if they make threats.
Here are some telltale signs of loan scams:
The main red flag that is noticeable right from the start is that a service that seeks out people with bad credit. Reasonable lenders or services that help people get loans want reliable candidates who will pay back their money. Eagerly seeking risky applicants mean that they want to charge high interest rates or simply make off with any fees they ask for upfront.
Second, do not work with someone who asks for fees upfront and those that are paid through anonymous means, like a prepaid debit card or cryptocurrency.
Third, if they absolutely guarantee you will get a loan despite your credit history avoid working with them, because this does not make sense. Some legitimate financial companies will loan to high-risk clients, but they will not guarantee a loan and will take credit history into account. If approved, the high-risk recipient of the loan will pay higher interest rates, but not the impossibly high rates demanded by loan scams.
When you realize you have fallen victim to a loan scam, report it immediately. This will help you recover from the scam and can alert the authorities to prevent others from being targeted. There is some hope to retrieving funds if you work with an agency such as TDA. While there are no guarantees, TDA has helped thousands of clients recover funds.
If you have been the target of a loan scam, contact Trader Defense Advisory. Our team of experts has vast combined experience dealing with loan scams and advocate for our clients. Consult with us and we will create a claim and help you get started on the path to retrieving your funds.