Alert! Personal Loan Scams: You Can Be The Next Target

Highlight: As more personal loans are being borrowed, personal loan scams have also increased. Here’s how to keep yourself safe from it.

Online loan scams have become an increasingly common news headline today, but are there chances of it happening to you? Let’s set the context before we explore this question. With the advancement in the fintech sector in the recent past, availing of a personal loan has become as easy as online shopping. In today’s time, a person can even avail of a personal loan online, sitting comfortably at home with next to no formalities or paperwork through platforms like Fibe. 

This option seemed godsent, especially when the entire world was battling the COVID-19 pandemic. On the one hand, the income sources of many individuals dwindled, as there were several salary cuts and even layoffs. 

On the other hand, several contingent expenses, such as the ones related to health issues or even for facilitating work from home, kept cropping up. It was difficult to go to a bank physically and apply for a loan. 

While the easy availability of personal loans has been quite the saviour for many, you still need to be vigilant. As the number of instant loans being disbursed has considerably increased, so have the instances of online loan scams. 

In fact, within the past year (up till March 2021), as many as 45,613 cases of loan fraud were reported, which amounts to roughly ₹4.92 trillion, revealed RBI as a response to a recent RTI application. 

How To Avoid Falling Prey To Personal Loan Scams

• Keep an Eye Out For Online Phishing 

With new NBFCs and digital lenders in the market offering personal loans at just a click, it becomes difficult to know whether these websites and apps are genuine. The first and the most easily identifiable red flag is if the lender website does not have an ‘s’ after the ‘HTTP’, which means that the website may not be secure for online transactions. 

Such websites may misuse your personal information, which possibly can be the genesis of an online loan scam. 

• Watch Out For Upfront Costs or Loan Fees

While it is pretty standard for lenders to charge a processing fee for a personal loan, most lenders either deduct it from the loan amount or adjust it within the repayment. If the lender is asking you to deposit any money upfront pre-approval or post-approval – before the disbursement of the loan – be wary. This may mean that your funds may be misappropriated or that you may be caught up in a loan app fraud. 

Also Read: Personal loan hidden charges

• Don’t Believe Limited Period Offers 

Getting a loan is not like buying a gadget online. There cannot be ‘flash sales’ or ‘limited period offers’. Loans are directly linked to your credit history and if your lender is pushing you to make an urgent call on your loan, the chances are that they may be pushing you to make a rash decision. 

Do not fall for such antics and make sure to do your due diligence before zeroing in on a personal loan to avoid getting trapped in a scam.

• Be Careful If the Terms and Conditions of the Loan are Vague or Obscure 

Any legitimate lender has standardized eligibility criteria and set terms and conditions attached to the loan. After all, this constitutes a binding contract between the borrower and lender and protects their future interests as it does yours. 

If the terms of the personal loan being offered to you are vague or are too good to be true, the chances are that there may be some hidden agenda or an online loan scam in the making.

How Do You Deal With Loan Scams?

If you think you’ve fallen prey to potential loan fraud, here’s what you must do:

• Keep a careful record of all your transactions with the suspected lender
• Pursue legal against the lender if they turn out to be fraudulent
• File a police report with all the necessary details
• File a report with the cyber crime branch if you have fraud has taken place online
• If you believe that your account details have been compromised, move your funds into another account and block your compromised account and card immediately

Keep in mind that in case of any unauthorized transaction, you can contact your bank and report the matter. As per RBI regulations, the bank will cover the lost amount if you report the unauthorized transaction immediately and no fault of yours is found. 

While online personal loan scams are getting too common these days, with a little caution and alertness, you can avoid them altogether. Just make sure to keep in mind the above-mentioned red flags and make a wise choice. 

It is always good to go with a reputed name like Fibe when you are choosing your lender. Fibe is one of the most preferred online lenders out there. So, get started now and download our Instant Loan App or register on our website for hassle-free financing.

FAQs on Personal Loan Fraud

How to avoid online loan scams?

You can avoid loan scams by applying for loans from RBI-registered financial companies or institutions. It is also crucial to check the institution’s registered address on its official website.

How do I know if I’m being scammed by a loan company?

Here are some of the signs that you may be getting scammed by a personal loan company:

• You are being rushed or goaded into signing up for a loan
• The loan company has no physical address
• The loan company’s website and/or app is not secure
• The lender is not transparent about all the fees and charges or has asked you to pay a fee before disbursing the amount
• The lender hasn’t asked for any documents and hasn’t tried to check your repayment history
• The lender has given you an approval guarantee

How do personal loan scams work?

Loan scams work in multiple ways:

• A scammer pretends to be from a genuine bank or NBFC and tries to get you to share personal data
• The app or website that you open is fake and steals your confidential data or money
• The loan terms are such that you are likely to default and pay heavy fines

What is a loan scam?

A loan scam is any experience that offers credit under false promises meant to swindle you out of money or personal data. This may refer to unspecified fees being charged, fake websites that steal your financial data, or other forms of harassment to repay money you may have already paid.

What is personal loan fraud?

This refers to any fraudulent activity or scam that results in loss of money and peace of mind. While such scammers often target those who are new to credit or do not qualify for regular loans, they are becoming more common and can happen to anyone.

Is loan fraud serious?

Yes, loan app fraud-related activities are illegal and criminal offences. You can report any such incidents to a cybercrime police station close to your area of residence. 

How do I report personal loan fraud?

To report fraud related to personal loans, file a complaint at your local cybercrime police cell and inform your bank, so any payments can be stopped or put on hold at the earliest. Support your complaint with any screenshots, call recordings, or transactions to give complete information.

Can someone take a loan in my name?

Yes, someone else can avail of a loan by fraudulently using your PAN details. Such fraudulent loans will also reflect in your credit history and thus, it is essential to check your credit report regularly.

How to check if a loan company is legitimate?

You can check if a loan company is legitimate through the RBI website. A bank or NBFC will be genuine if it is registered with the RBI. 

Is the Fibe app loan real or fake?

The Fibe app is entirely real, as it is registered with the RBI.

Do banks refund scammed money?

Sometimes banks will refund money to you if you report the fraud immediately and there is no fault of yours.

How can I check if someone took a loan in my name in India?

Each loan gets reflected in your credit report. So, you can check your CIBIL report to find out if someone else has taken a loan in your name.