What is Loan Fraud?
Loan fraud is a con when a criminal steals your identity and applies for a loan on your behalf. Loan fraud also includes when a victim has a line of credit and a fraudster uses that line to withdraw money. Fraudsters frequently create new loans and then disappear with your money, leaving you to deal with enormous bills. Your credit score will be severely damaged by this.
Nowadays, getting a loan is simple because to increased digitisation. The whole loan application process including processing and disbursement can be done online. This is quick and simple, but it has led to an increase in loan fraud. Recent media reports state that consumers are now concerned about seeing new loan accounts on their credit record even if they have never borrowed money through those accounts. Numerous con artists utilise the PANs of numerous persons to get loans from third parties. Fraud using debit or credit cards has also increased. This occurs when someone uses your credit card or debit card without your permission to make transactions. Your credit score may be impacted by loan fraud and credit card fraud.
How to Spot Online Loan Fraud by the Red Flags
- Fraudsters most frequently get personal financial information from victims through calls, SMS messages, and WhatsApp conversations.
- As opposed to enquiring about your credit history and score, scammers will concentrate on obtaining your personal and financial information.
- While these costs are always collected after the loan is authorised, fraudsters will demand them before the loan application process has even begun.
- They won’t give you a chance to ponder before they suggest limited-time deals.
- The dishonest party will avoid disclosing or refuse to provide their registration address and other pertinent information.
Methods for Avoiding Online Loan Scams
The following are the methods for Avoiding Online Loan Scams
1. Stay away from utilising Public Wi-Fi
You might become a victim of online fraud if you do your banking online on shared computers or in public locations like cybercafés, e-libraries, etc. If the shared computer’s “auto-complete” feature is enabled, a fraudster may quickly steal information like your email address and other financial details. Therefore, to prevent abuse, always erase the temporary files, cache, and browsing history after using a shared computer. Don’t forget to log out after each transaction, and never leave your laptop, desktop, or tablet unlocked.
Avoid utilising unprotected public Wi-Fi when applying for a loan online using your smart phone. Use your personal Wi-Fi or 4G/5G connection instead. Even then, avoid saving any important data to your smart phone.
2. Confidential and Personal Information Should Remain Private
Avoid divulging private information over the phone, over email, or in an online chat room. The banks or other financial institutions you do business with should be contacted. Don’t keep passwords in plain text on your phone or computer, and avoid sending sensitive information like credit card numbers over unencrypted email. A password manager should be used. They are easy to set up and come in a variety of options.
3. Monitor Odd Transactions
Configure all the additional security features on your business and personal bank accounts. The use of two-factor authentication and receiving text message alerts about questionable transactions can also help you protect yourself against fraud.
4. Be careful while uploading Documents, Making Payments Online
When applying for a loan online, you might need to supply specific papers such your PAN, Aadhaar, bank statements, etc. Be careful when downloading documents and making payments online. These documents include important financial data. They may be utilised improperly if they are not uploaded to the bank’s official website.
In a same vein, use caution while downloading documents like loan application forms, etc. If you don’t, you can become a victim of a virus assault that can cause your computer, laptop, smartphone, or other device to crash, identity theft, data theft, tracking of user activities, and more. Install a firewall, as well as authorised anti-virus and anti-spyware software, and make sure it’s updated frequently, to prevent this. In a similar vein, if you are requested to pay money, such as processing fees, be sure the fees or charges are legitimate.
5. Avoid answering Phoney Calls or Texts Offering Promotions
Voice-recorded calls offering loans or calls from various telemarketers are rather typical in today’s world. While some of them may be real, the majority of them is false and aims to steal your important data. Therefore, consider getting in touch with the bank directly if you want to learn about Personal Loan eligibility or interest rates.
6. Access via Official Applications and Protected Portals
There are phoney websites that resemble your banking institution. For a more genuine feel and appearance, they can be concealed. So, when seeking for a loan online, make sure you only visit the official or legitimate portal of the lending company or bank.
In the best case scenario, you must enter the official bank URL in the browser’s address bar. There is an active SSL certificate for every secure website. ‘Check my loan status’: are you seeking for ways to do it? Useless text message or email IDs include any links that have been shared. Smishing or phishing might make you a victim. Phishing and smishing are two terms used to describe emails that are sent out to fool people.
7. Register the E-Mail ID or Phone Number with your Bank
It will help you receive timely updates about the financial transactions. Also, you will get to track the loan application status on time. If there are any discrepancies, contact your bank right away to avoid frauds.
8. Keep your PINs and Passwords Strong
Your password should be rare, distinct, and contain a mix of digits, capital letters, and special characters. Never use passwords that are directly linked to you, such as your phone number, birthdate, or other personal information.
Use two-factor authentication wherever feasible since it improves security. No matter how close a person is to you, never disclose your passwords or PINs with them.
9. Follow Up on your Credit Report
Even though obtaining your credit reports is preferable, checking your bank statements once a month is a smart idea. They’ll let you know if someone has been using your name fraudulently to make transactions that don’t show on your regular statements.