Key Takeaways:
Never send money through a gift card, wire transfer, cryptocurrency, or payment app to obtain a promised loan.
Verify the lender independently before sharing financial information.
Treat urgency, guaranteed approval, and unexpected loan messages as warning signs.
A personal loan scam often involves a bad actor posing as a lender who can ask you to pay a fee before you receive any money or represents a loan approval without reviewing your credit history or loan application. Issues can arise when some people recognize the fraud only after sharing personal details or paying money without ever receiving the loan. Keep in mind that legitimate lenders can and do send prescreened loan offers, but those offers are different because such offers are typically sent to people following a soft credit inquiry. With prescreened offers, applications are still required to determine if you qualify for the loan.
When urgency arises for an unexpected expense, it can be easy to overlook the distinction between a scam attempt and a legitimate invitation to apply for a personal loan. Here are five practical ways to avoid becoming a victim of a scam and to evaluate personal loan offers before sharing sensitive information.
1. Watch for Upfront Fee Requests
Some scammers promise you a loan but ask you to send a payment before receipt of any funds. The bad actor might call the payment an application fee, insurance, a processing charge, or a “good faith” deposit. Also notable is that they often request that the payment be made through certain difficult-to-reverse methods such as a gift card, wire transfer, or payment app. The Federal Trade Commission (“FTC”) notes that legitimate lenders typically evaluate your credit and application before making an offer, and credible lenders will not promise to extend credit based on payment of a fee upfront.
2. Question Guaranteed Approval Claims
A guaranteed approval claim is a promise that you qualify for a loan before the lender has reviewed your credit or loan application. Phrases like “bad credit, no problem” or “no hassle-guaranteed” are warning signs the FTC associates with advance-fee loan scams . Lenders that follow state and federal rules generally check your credit history and ability to repay before making a loan offer. Therefore, a premature loan approval guarantee suggests that the person or entity is posing as a lender and is interested in fraudulently collecting a fee or obtaining your personal information for nefarious reasons.
Consider treating any promise of loan approval as a signal to slow down and research the company before sharing personal or banking details.
3. Slow Down High-Pressure Offers
Do not let anyone pressure you into making a decision on the spot. Pressure could take the form of a countdown, noting, for example, that the rate expires in one hour, a threat such as “your application may be canceled,”, or repeated calls and texts urging you to act. Honest businesses generally give you time to think an offer over and review written information before you commit.
If the calls won’t stop, consider blocking the number and reporting unwanted communication to the FTC.
4. Be Wary of Unexpected Messages
A loan phishing message could claim that you were prequalified for a large loan amount or is following up on an application you never submitted . The FTC warns that phishing messages often tell a story to get you to click a link or open an attachment, which might install harmful malware on your device or lead to identity theft.
If a loan message arrives out of nowhere, do not click links or open attachments. Before deleting it, you could forward scam texts to 7726 (SPAM).
5. Look Up the Lender’s License
A license check could help confirm that a company is authorized to lend in your state. Lenders must register where they do business, and your state attorney general or banking regulator could tell you whether a company is registered. An offer from a company you cannot find in any licensing record could be a sign the “lender” does not really exist.
Before applying, you could search the company name on NMLS Consumer Access, a free service for confirming whether a financial-services company is authorized to do business in your state. You could also contact your state attorney general’s office to ask how to check for complaints or report suspected fraud.
Frequently Asked Questions for Avoiding Personal Loan Scams
What could I do if I already paid a loan scammer?
A first step could be contacting the gift card, payment app, wire transfer, or other payment processing company to ask whether the payment could be reversed or refunded. You could also report the scam to the FTC at ReportFraud.ftc.gov and to your state attorney general.
What if I already shared my Social Security number?
You could visit IdentityTheft.gov, the federal government’s identity theft recovery site, for specific steps based on the information you shared with the alleged scam actor. You could also consider a fraud alert, which tells businesses to check with you before opening a new credit account in your name, or a credit freeze, which prevents creditors from opening new credit accounts in your name while the freeze is in place.
A Note About Lending Rules
Lending laws and licensing requirements vary by state and by lender type. Scam tactics may also change over time. The information above is meant as general guidance, and not professional advice. If you believe a scammer has targeted you, consider contacting your state attorney general’s office or an appropriate professional about your specific situation.
Exploring Your Options with Mariner Finance
If you’re considering a personal loan, Mariner Finance could help. Check your loan offers online, contact us at 1-877-310-2373, or visit a branch location to explore what is available.* Be sure to ask about our 15-day satisfaction guarantee.**