There has been an increase in loan scams as people become financially desperate and see a cheap loan as a way out of a financial crisis.
My own inbox is flooded each day with emails from companies claiming to offer really cheap loans. Many of these emails use the names of well known finance companies. They pretend to be a legitimate lender and even fraudulently use the registration number of legitimate credit providers to appear authentic.
In their email or SMS they claim to offer loans to blacklisted people, at ridiculously low interest rates. They offer consolidation loans at rates as low as 3.5% per annum. This alone should be a warning sign to any potential borrower.
These loan scams work by getting you to pay them money. In all the scams the loan provider asks for an upfront payment to release the loan. They tell you it is for “legal fees”, “insurance” or “bank costs”.
Once you have paid, they then ask you to pay another fee you didn’t know about. As you are already down several thousand rand by now, and are more desperate than ever, you pay the next amount as well.
This continues until you realise you have been scammed and they just disappear.
In some cases, victims who have tried to confront the scammer have been harassed and bullied. Scam artists have even demanded that the victim pay them the value of the full loan even through the victim never received a cent.
They even threaten blacklisting – which they cannot actually do and is just a way for them to intimidate their victim.
Apart from the ridiculously low interest rates, these loan scams are very easy to spot because under the National Credit Act, no credit provider is allowed to ask for upfront fees.
So if a lender is suddenly asking you for money upfront, walk away immediately and report them to the National Credit Regulator.
If you have already fallen victim, notify your bank. They have a fraud division that cooperates with the other banks. They can take steps to freeze the scamster’s account before the money is withdrawn.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.
Be vigilant, use common sense and remember: if it looks too good to be true, you are about to be scammed.
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