In between the “legit” offers, you note some ads professing to offer an ultra-convenient loan-finding service, offering “same-day approval”, with no credit checks and “blacklisted welcome”. The offers appear generous, putting you in control of how much you want or need. Soon, all your money problems will evaporate into the ether.
Money, after all, gives you more options, so you start planning: you imagine a world in which you can settle outstanding school or varsity fees, catch up on car payments (heck, even settle with the bank), fix your kitchen, take a well-deserved break or even consolidate your debt. You think you’re in on the secret but, actually, you’ve been caught.
The more worldly-wise among us will scoff at such quick-fixes. After all, if it sounds too good However, an alarming number of people are still falling for these scams.
Here's a sample of some of the complaints I receive far too often:
“A couple of months ago, I went online to search for loans, and I entered my details onto a website to assist in bringing up names of financial institutions who could assist me in getting a loan.
“I actually decided against it after putting my details in, and killed the site. A few months later, I found deductions in my bank account, and decided to find out what that was for. This company was deducting money, without any approval or signature from me I called my bank, and they reversed all the payments, except for the first two months which was now around R600 already. I decided to leave that as is, but would never give them another penny more. My bank has now blocked all payments to them, but now they have decided to send me letters of demand.
“I read online that there are thousands of people they are scamming. How is it possible that a company like this is allowed to get away with blatant fraud and extortion like this?" Lebo*
“In February I was in need of a loan so I went on to the internet and found this company. I sent them an e-mail applying for a loan They sent me a document to complete (which I thought was an application). A few months later they started sending me threats and letters of demands claiming I owed them money. First of all they are not a loan company - so they never gave me any money whatsoever I never applied for any other services from them. I wanted to report them on the internet and realised that there are so many people that have been scammed by this specific company.” Bernadette*
“In 2014 I went on to the internet looking for a loan and completed an application form, which I never received a confirmation of approval or rejection. To my surprise I received a letter to pay R399 to proceed with my application which I have never paid, unless they deducted it from my account without my knowledge. I never received any service or loan from them but now they’re threatening me with a court order and to blacklist me if I don’t pay up.” Adri*
Here’s what you should know about these “loan” scams and how to avoid them:
If a company claims: “Blacklisted welcome”, “no credit checks done”, "debt review/bad credit welcome", they are operating illegally. Legally, companies are required to be registered with the National Credit Regulator (NCR) and be compliant with the National Credit Act which means they need to conduct affordability assessments. Consumers under debt review are prohibited from getting a loan and they will only access credit through loan sharks.
NCR's manager for investigations and enforcement, Jacqueline Peters, explains: “The National Credit Act since 2007 has required a credit provider to conduct an affordability assessment by taking reasonable steps to assess the consumers’ debt repayment history prior to granting a loan.”
If you cannot afford finance and don't pass the credit checks, you're simply not going to get money legally from any credit provider.
NCR registration numbers will be listed on the website of reputable credit providers but loan sharks and scam artists either don’t bother with accreditation or post fake NCR numbers on their sites. When in doubt, consult the regulator’s website www.ncr.org.za.
If you receive mail or an SMS about a low-interest, “guaranteed” personal loan, ignore it because it's probably a scam. Legitimate credit providers will not resort to “spray and pray” marketing tactics to offer guaranteed loans to consumers who haven’t been properly vetted.
If you’re being asked to pay upfront “admin fees” into a private bank account or see a company operates from a Gmail, Hotmail or other personal e-mail addresses, avoid. You should never pay to get a loan. The NCA does allow for initiation fees, but those are built into credit agreements.
Steer clear of companies claiming to be able to scout, find or connect you with a loan. Whichever way their sites are sugar-coating their services, it’s false advertising and the promised loans are a decoy.
What you’re signing when you complete their online forms (without reading the fine print) is a commitment to pay an initiation fee for a year’s worth of their “convenient” service package of legal advice. By summarily ticking the Ts&Cs, you are agreeing to their terms. If you don’t pay, you’ll get threats.
Give these “loan” providers a very wide berth. You're not going to get any money from them and will only end up poorer. What makes such scams even more despicable is the fact they prey on desperation and leave their victims more wretched. You might well ask: Why are they getting away with it and what are the authorities doing about it? For now, nothing, it appears.