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How to identify a loan scam

By Supplied Time of article published May 30, 2019

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Many people have been targeted by advanced-fee scams that attempt to con them out of their hard-earned money. With the advent of the digital technology, scammers are finding new avenues to target their victims and companies have warned of an upsurge in fraudulent activity.

The formula is simple: victims are promised large sums of money in the form of a loan but are required to pay a comparably small “fee” upfront. To carry out their ruse, scammers typically impersonate a well-known loan provider and claim that to be offering a large, low-interest loan.

“We have seen an increase in incidents of fraud, specifically advanced-fee scams,” says James Williams, the head of marketing at Wonga SA. “What is most concerning is how ‘slick’ these scams have become, with fraudsters posing as Wonga in calls, emails, text messages and even social media posts that bear an uncanny resemblance to our own communications.”

Scammers often follow a formula. To help people identify and avoid these scams, Wonga has laid out the steps con-artists typically follow:

1. Contact. Commonly, scammers pose as Wonga contact victims through text messages, email and fake Facebook or Twitter accounts. They send victims friend requests or comment on Facebook or Twitter posts advertising the fact that they are loan consultants. The scammers usually claim to offer low interest rates, well below the prime lending rate. They also claim to provide loans to blacklisted people without the need for credit checks.  

2. Gathering personal information. After contact has been established, scammers ask their victims to provide personal information such as their name and surname, identity number, salary and employment details, financial status and bank account details.

3. “Approval.” Once this information has been provided, the victim's loan will be “approved”. Loans are always approved, regardless of the amount, loan term or applicant's credit status. This process is usually done rapidly, as the scammers try to capitalise on the victim's ignorance before they become suspicious.

4. Requesting payment. After being informed that their loan has been approved, the victim is told that in order for the funds to be paid out, they are required to pay a fee upfront. Scammers often claim that this is an upfront administration cost required for the legal team to release the payment. Scammers will usually request that payment is made quickly.

5. Requesting further payments. Often, as soon as the initial payment has been made, the scammers will try to extract more money from the victim. This is done by requesting further payments for additional legal or administrative costs. The scammers will exhaust this process until the victim becomes suspicious or can’t afford to make any further payments.

6. Vanishing without a trace. Upon realising that no more money can be extracted from their victims, the scammers will disappear without a trace. This leaves their victims out of pocket, with very little recourse to pursue their lost funds.

If you are asked to pay any upfront fees for a loan, you are likely being scammed. If you think that you've been a victim of fraud or you'd like to report fraud anonymously, most financial service providers have anti-fraud departments.

Supplied by Wonga

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