An increasing number of people are turning to the internet when they need to borrow money quickly. But how do you do this safely?
If you’re thinking about taking out a loan, you’ll need to ensure that you borrow from a reputable and legitimate company. Luckily for you, we’re here to offer some quick and simple tips on how you can do this!
Check The Financial Services Register
When looking to borrow money, this is the first and easiest thing you can do to ensure your safety online. All trustworthy lenders are authorised and regulated by the Financial Conduct Authority. Visit their Financial Services Register, and search for the lender you wish to choose to ensure that they’re registered.
Use A Secured Website
In order to protect your personal details, lenders should adhere to the information rights upheld by ICO. All reputable lenders use data encryption to ensure that any information sent online remains 100% safe and secure. Many providers will state this clearly on their website, so look out for it!
Research The Company
- Ensure that the lender exists in reality. All genuine lenders should have a physical address clearly listed on their company’s website.
- It’s also a good idea to check whether the lender is listed on the government’s Companies House site, here you will be able to find all company information, details and accounts.
- Make sure you read client reviews. Trustworthy lenders will feature honest reviews and ratings on their websites that are easily available for the public to find.
Know The Key Signs Of A Scammer
It’s important to mention the risk of loan scams and fraud when borrowing money. Unfortunately bogus loan companies do exist so it’s important to be aware of how to protect yourself and prevent being targeted by illegitimate lenders.
Loan Fee Fraud
Loan fee fraud usually occurs after you have previously made an application for a loan, but it can also happen out of the blue.
You might receive a text, phone call or email with a loan offer, but if you are asked to make any up-front payments, it’s likely this offer is a scam.
In 2017, the number of loan fee fraud cases reported to the Financial Conduct Authority increased by 44% and a staggering £3.5 million was lost to fraud in the UK alone. The FCA also found that over 72% of the public weren’t aware of scams in relation to loans, but there are ways that you can identify such scammers and prevent falling victim to fraud.
Be wary of:
- Guaranteed loan offers. Legitimate lenders always ask for credit checks and most of the time the loan offer depends on this information. Scammers try to attract borrowers by promising guaranteed loans regardless of the circumstance.
- Upfront fees. Scammers will give different reasons for charging upfront fees, typically ranging between £25 and £450. They might claim that the fee is a refundable deposit, an admin fee or in place because the borrower has bad credit history.
- Unusual payment methods. You will typically be asked to transfer payments in an unorthodox way, such as using gift cards or vouchers. This is because these type of payment methods are untraceable, making it easier for scammers to get away with criminal spending.
A common way that scammers are able to reach people is through the internet. Watch out for unexpected emails offering no-credit check personal loans. Legitimate lenders do not send random emails inviting people to borrow money at low interest rates.
- Never click on links or download files
- Watch out for emails containing spelling, punctuation or grammatical mistakes
- Don’t be fooled by phrases like ‘no credit checks’ or ‘zero / low interest loans’
Voice phishing is a method used by scammers to target people over the phone. This type of scam involves getting banking or credit card information from people over the phone, which can then be used against them for financial reward. It is often referred to as ‘vishing’, a combination of ‘voice’ and ‘phishing’. Fraudsters will call from verified landlines or mobile phones, and some may have your personal information (such as name, address, phone number) to make them seem legitimate.
- Look out for ‘warm up’ calls. These calls might not ask you to send personal details straight away, but they set the scene for a follow-up call where you will next be asked to disclose your banking information.
- There shouldn’t be any urgency or time limit. Watch out for ‘limited offers’; most scammers will try to get you to act as quickly as possible, giving you little time to decide whether to proceed or not.
- Do not give out your banking details. Genuine banks and financial organisations will never ask for your personal or financial details over the phone. To make the deal appear more secure, you might be asked to tap your PIN numbers into the telephone keypad as opposed to saying them out loud over the phone.
If you think you have fallen victim to loan fee fraud, phishing or an online scam, report it to Action Fraud immediately by contacting 0300 123 2040. You can also turn to the Financial Ombudsman Service, which looks at a wide range of complaints relating to financial scams and frauds.