4 Easy Ways to Protect Yourself from an Online Loan Scam
Some members have recently fallen victim to online loan fraud. As Unitus’ Fraud & Security Manager, it hurts to see even one.
So today I’m going to show you 4 easy ways to protect yourself from online loan scams.
What does an online loan scam look like?
Let’s take a recent example. A member applied for a loan online at another financial institution. They provided their account details for ACH deposit and received their funds. All normal. But then, they suddenly experienced SnapCheck remote deposits they never authorized!
There is always some risk involved, but you can take steps to protect yourself.
Whenever you give out sensitive personal or financial information on the internet, you are taking on some risk. This is especially true of online payday loans.
In a perfect world, all online lenders would be completely legitimate. Unfortunately, scam online lenders abound on the internet.
That said, you can protect yourself by watching out for these signs.
Here are 4 signs an online lender is trying to scam you
1. They ask for access to automatically withdraw payments from your bank account.
By law, no lenders can require that you allow them to automatically withdraw payments from your bank account.
How to protect yourself: Stick with lenders who offer a variety of payment options. After all, if you give a lender unfettered access to your bank account, you could regret it.
2. They lend without performing a credit check.
Legitimate online lenders always perform credit checks.
Why? When they lend you money, they are taking on risk. A credit check is a way for them to protect against that risk by measuring how likely you are to pay them back on time.
If they don’t require a credit check, they will need to protect against risk in other, harmful ways. This often means charging rates and fees through the roof, leaving you paying dearly.
How to protect yourself: Steer clear of online lenders who don’t perform credit checks.
3. They use an unsecure website.
Here’s a definitive sign an online lender is a scam: Their website lacks crucial security features.
Since online lenders deal with highly sensitive financial and personal information, they must provide a highly secure environment.
How to protect yourself: Check the URL for their site. It should begin with “HTTPS” in the browser bar, rather than HTTP. You should also see a small lock symbol on your browser’s address bar, next to the website’s URL. If you don’t see these, beware of scammers.
4. They have a history of scamming.
The good news: These days, you have people on your side dedicated to stopping scammers.
How to protect yourself: Before you complete an online loan, search for online reviews of the lender and see if they have any complaints filed against them.
Not sure where to look? Start with these three excellent resources:
- Look for their file with the Better Business Bureau.
- Check the complaint database operated by the Consumer Financial Protection Bureau.
- Search for the lender in the FTC’s Scam Alerts website.
Online loans can be tempting for their promise of fast and easy access to money. And many will provide exactly that in a safe way.
But beware the many scammers out there! Follow the guide above and watch out for these signs to make sure you aren’t left footing a bill you never asked for.