Beware loan scams

Beware loan scamsI recently received an unsolicited email from a company called Yes Money Loans. They claimed to be offering loans to blacklisted people at an interest rate of just 3.5% per annum. Considering they were marketing to desperate people who had been “blacklisted” and given the ludicrously low interest rate, I was suspicious that this could be a loan scam.

The email contained an NCR registration number, but when I checked it on the National Credit Regulator website, I found that the addresses and contact details did not match. The NCR had the company registered in Tzaneen and this business claimed to be operating from Rosebank in Johannesburg. I sent the email on to the National Credit Regulator to investigate.

Listen to Maya and Mapalo Makhu discussing this and other topics in the My Money, My Lifestyle podcast.

By complete co-incidence, later in the day I received an email from someone who told us he suspected he had been the victim of a scam. The company involved was the same Yes Money Loans. His experience was exactly in line with the usual modus operandi of a loan scam. In all loan scams the loan provider asks for an upfront payment in order to release the loan. This is usually for “legal fees”, “insurance” or “bank costs”. Once you have paid, they usually ask you for more money – as you are already down several thousand rand, and now more desperate than ever, you pay the next amount as well. This continues until you realise you have been scammed and they just disappear.

Mike (name changed) applied for a large Yes Money Loan at the advertised 3.5% p.a. He was assured that there was no catch and that they were just running a special for this month. “My loan was approved with an approval letter from the director two days later.  They then requested R5 000 for legal and insurance fees in case something happens to me (death) as this insurance will pay the full amount. I paid the amount as everything sounded legit.  Then the next moment I received an SMS asking for more money,” says Mike.

The SMS appeared to be a confirmation of payment from HSBC Bank stating that the loan amount would be paid into the borrower’s account, but that he needed to pay a “bank transfer charge (BTC)” of several thousand rand more in order to receive the loan.

Mike said he immediately called the woman from Yes Money Loan. She told him that he had signed a contract and that it stipulated that he is responsible to pay the additional amount. Once he had paid the second amount, he received a call to say payment had been received and that the loan amount would be paid out in two days’ time.

Then Mike received another SMS claiming to be from HSBC Bank. Again, it said the loan was approved but a further, even larger payment, was required.

Smelling a rat

“I started smelling a rat and called the office again.  The woman became arrogant and irritated. I was told that if I do not pay the money I will have to pay the full loan amount even though I had not received any money! I was told I must go to my bank to borrow the money to pay them.”

By now Mike was convinced that he had fallen for a scam and contacted City Press. At this stage the company is still hounding and threatening him.

City Press contacted the company via the cellphone number provided in the original email. We were told by a woman called Lisa that they offer loans to people with judgements against them. When asked about the discrepancy in the address registered with the NCR, she told us they had moved. She told me there were no upfront fees or bank fees, except a payment for insurance cover. When I asked what the insurance cover was for, she put the phone down.

What is not clear is whether this is the same company that is registered with the NCR or someone using their details. City Press attempted to contact the NCR-registered company on the number provided by the NCR website but there was no answer. It is not uncommon for scam artists to use another provider’s details. A similar scam was used against two years ago.

The National Credit Regulator is still investigating but issued this statement: “As per the National Credit Act, credit providers are not allowed to charge consumers upfront fees. Please tell the consumer not to pay anything upfront, in this case, they should not pay any other monies.”

Christoph Nieuwoudt, CEO of FNB Consumers says “If an offer sounds too good to be true then in all probability it is a scam.” Nieuwoudt reminds customers that financial institutions evaluate their risk appetite against the customer’s credit-worthiness and ability to repay the loan. This is why so-called ‘blacklisted’ customers struggle to get credit.

“If someone is prepared to lend you money when other institutions are not, and at an even better rate than a prime customer, you need to be asking some serious questions. Overall, we encourage customers to work towards maintaining a good credit record to avoid falling victim to unscrupulous or fraudulent operators.”

What to do if you’ve been scammed

If you believe you are a victim of a scam do the following immediately:

  • Notify your bank. They have a fraud division that cooperates with the other banks. They can take steps to freeze the scamsters’ account before the money is withdrawn.
  • Go to the police to open a case and get an affidavit. This may be required by your bank and the regulators.
  • Notify the authorities. In the case of a loan-related scam you can contact the National Credit Regulator on 0860 627 627 or for investment scams contact the Financial Sector Conduct Authority on 0800 2020 87.


 This article first appeared in City Press.

6 CommentsLeave a comment

  • Similar situation befell me in December 2019 with a financial institution going by the name ARW FOREVER CASH SOLUTIONS PTY LTD. First of all this was not the first time I was so maliciously scammed so I thought I was the wiser in this case by verifying details of this raid company with NCR. Everything checked out as far as the credentials until they asked for application fees. Thinking it might be their company policy and knowing how I have previously struggled getting approved, I subsequently fell for their transactional fees, security fees, bonds and loan clearance fees. I fell for this because I had thought for damn sure I was a high risk borrower so to my logic it made sense until I picked up on this never ending trail of required funds from me, to which at every turn I was told the money would be transferred into my account in no less than 2 hours. I have initiated and submitted the report to NCR but what disappointed me was my bank when I asked them to verify those account details BEFORE I made the deposit. I had thought it would be their initiative to further protect the depositor into falling to Scams.

    • Thank you for sharing your story. I’m so sorry it happened to you. These scammers are getting wise and using legitimate company’s registration numbers. I would still recommend you notify your bank’s fraud department. Unfortunately the day to day banking people would not know the legitimacy of the company.

  • have the same situation now i got a loan place planet loan firm and also ask me for 1500 for service fees up front and then another 3500 unfortunately i paid it all and now they don t answer me back to give me my loan and wont give money back that i paid

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