Loan scams are a common occurrence in the financial world, and they can happen to anyone who is looking for a loan. These scams are usually carried out by fraudulent companies or individuals who take advantage of the borrower’s need for money and the trust they have in the lender. They can come in many forms and target people of all ages and income levels. Loan scam cases are rising in India – and RBI is also making people aware these frauds.
One common loan scam is the “advance fee” scam. This type of scam targets individuals who are in need of a loan and are willing to pay an upfront fee to the lender in order to secure the loan. However, the lender takes the fee and never provides the loan, leaving the borrower out of money and without a loan.
Another common scam is the “phishing” scam. This type of scam usually starts with an unsolicited phone call or email from someone pretending to be a representative of a legitimate lender. The scammer will ask for personal information such as PAN, or AADHAAR numbers, bank account information or credit card numbers, which they will use for identity theft or to drain the borrower’s bank account.
Another common scam is the “fake government grant” scam. In this scam, the fraudster will claim to represent a government agency or a non-profit organization and tell the borrower that they qualify for a grant or a loan that they never have to pay back. They will ask for a small fee or personal information as a “processing fee” and will never provide the grant or loan.
A “debt relief” or “debt consolidation” scam is another common scam. In this scam, a company will promise to help you pay off your debts by consolidating them into one payment or by negotiating with your creditors to lower your interest rates or monthly payments. They will ask for an upfront fee, and after the fee is paid, the company will disappear, leaving the borrower with the same debt and out of money. This is becoming very common in India and target vulnerable borrowers who are already troubled by their past experiences from high interest foreign-origin mobile loan apps.
One of the best ways to avoid these scams is to be cautious when providing personal information or paying money to a lender, especially if you were not the one who initiated the contact. Additionally, it is important to do your own research before committing to a loan or lender. Check with the Ministry of Corporate Affairs or Reserve Bank of India to see if the lender is legitimate and if there are any complaints against them. You can also check with your state’s relevant government agency or consumer protection agency to see if they have received any complaints about the lender. It does not harm to do a quick check online to scrutinize. Also, don’t be desperate to get a loan quickly. If an offer seems too good to be true, it probably is.
In summary, loan scams come in many forms and can be difficult to detect. They can happen to anyone who is looking for a loan. Common loan scams include the “advance fee” scam, the “phishing” scam, the “fake government grant” scam, the “debt relief” or “debt consolidation” scam. To avoid these scams, it is important to be cautious when providing personal information or paying money to a lender, especially if you were not the one who initiated the contact. Additionally, it is important to do your own research before committing to a loan or lender by checking with the right government agency.