The Better Business Bureau of Canada confirms that over the past two years, Canadians have lost millions of dollars due to financial scams. Communities, large or small, are susceptible to loan scams, putting many people at risk of losing their hard-earned savings.
It gets worse.
Unfortunately, money lost to a scam is rarely recovered, demonstrating that an innocent mistake can have a high price to pay.
Canadians depend on loans
For some, gaining access to lenders can be life-changing. Loan approval can mean the difference between paying the electric bill and putting food on the table, or not.
Cue private online loan vendors.
Private web-based vendors have improved the financial landscape for many. Often, these online resources are more willing to assist people who are experiencing financial issues or those with denied loan applications from mainstream branches.
However, the increase in online loan vendors has also prompted the number of personal loan fraud cases. Recognizing the common signs of a loan scam can be the easiest and best defence against shady lenders.
How to spot a loan scam?
When you’re asked to pay upfront
A recent Loans Canada survey found that close to 45 per cent of credit-constrained Canadians who see themselves as financially savvy agree that alternative or online lenders are justified in asking for upfront payment because it adds additional security.
This misconception could be costly.
A licensed lender will never ask for upfront payment. Often fake lenders will request a processing or insurance fee before approving a loan. Don’t fall for this scam. If you’re asked to transfer money via e-transfer, credit card, or Western Union as a method to secure a loan, it’s safe to assume you’re being taken for a ride.
Life does not come with guarantees and nor do loan approvals. A verified lender will confirm applicant information and evaluate creditworthiness before approving a loan. Guaranteed approval is used as a way to trick applicants and collect upfront fees.
Want to learn more about why guarantee approval is a scam? Read Loan’s Canada’s blog to find out.
Scammers will often try to pressure loan applicants to commit quickly. They don’t waste time. Being rushed leads to people not realizing they’re being swindled. Be careful of any tight expiration dates as they can be a sign of a scam.
Do they really exist?
Loans Canada’s survey also shows that credit-constrained Canadians often don’t take the time to call vendors to perform additional research when taking out a loan.
When vendors have a lack of presence in the real world, assume something might be awry. Search out independent information on the lender and verify they have an actual office with a legitimate address.
Protect yourself with knowledge
Loans Canada recommends Battleford residents research lenders, looking for verified sources for reviews and even discussing applying for loans with trusted friends or family members. These are all ways that Canadians can arm themselves with more information, which will ultimately help them avoid falling for a loan scam.
Loans Canada Chief Technology Officer, Cris Ravazzano says, “Over the last few years we have seen an increase in loan fraud. Loan scammers are impersonating many online lenders and similar websites, tricking Canadians into paying to qualify for fraudulent loans. We want to bring awareness to this issue to help inform and protect potential victims of this fraud.”
I may have been scammed. Now what?
If you’re among the many Canadians who are scammed each year, recovering lost money is nearly impossible. Suspicious activity, however, should be reported to your local police and the Canadian Anti-Fraud Centre.