Recently, one of our friends got an EMI deducted from her HDFC Bank Account, for a loan against debit card, which she did not apply for. The bank could not provide any details on how it happened. Now, she is scared, and talking to bank branch and spending her time in the process of complaint, clarifications, and filing a police complaint for a potential cyber crime. Let us understand more about debit card loans.
In India, the concept of loans against debit cards is gaining popularity as it provides quick access to credit without having to go through a lengthy approval process. However, it is essential to be aware of the scams that are prevalent in this scheme and take necessary precautions to protect oneself from falling prey to such frauds.
What are loans against debit cards?
Loans against debit cards are a type of short-term loan that can be availed by individuals who have a debit card. These loans are usually of small amounts and can be used to meet emergency financial requirements. The amount of the loan depends on the credit limit of the individual’s debit card, and the repayment period is usually short, ranging from a few days to a few months.
The process of availing a loan against a debit card is relatively simple. The individual needs to approach a bank or a financial institution that offers such loans and submit their debit card details along with the necessary documents. Once the loan is approved, the funds are credited to the individual’s account, and they can use the funds as per their requirement.
Scams prevalent in the scheme
Unfortunately, like any other financial scheme, loans against debit cards are also prone to scams. Some of the common scams prevalent in this scheme include:
- Fake lenders: Individuals need to be cautious when approaching lenders for loans against debit cards. There are many fake lenders who claim to provide loans at very low-interest rates. They may ask for upfront fees or personal information like bank account details, debit card PIN, etc. These scammers may take the money and disappear without providing the loan.
- Identity theft: Scammers may use phishing emails, text messages, or calls to trick individuals into giving away their personal information like debit card details, bank account numbers, and PINs. They may then use this information to conduct fraudulent transactions or steal money from the individual’s account.
- Fake loan approval letters: Some scammers send fake loan approval letters to individuals, asking them to pay a processing fee or provide personal information to receive the loan amount. Once the individual pays the fee or provides the information, the scammer disappears, and the loan is never disbursed.
- Unsecured websites: Individuals need to be cautious when using online platforms to apply for loans against debit cards. Scammers may create fake websites that look similar to legitimate lenders’ websites to trick individuals into giving away their personal information. These websites may not have proper security measures in place, and the individual’s personal information may be compromised.
How to protect oneself from scams?
To protect oneself from scams while availing loans against debit cards, individuals should:
- Do research: Individuals should do thorough research before approaching a lender for a loan against a debit card. They should check the lender’s reputation, reviews, and ratings online to ensure that they are dealing with a legitimate lender.
- Check for security measures: When applying for a loan against a debit card online, individuals should check for security measures like SSL encryption, two-factor authentication, etc. to ensure that their personal information is protected.
- Never share personal information: Individuals should never share their personal information like debit card details, bank account numbers, and PINs with anyone. They should also be cautious when receiving calls or messages asking for such information.
- Verify loan approval letters: Individuals should verify loan approval letters by contacting the lender directly. They should not pay any processing fee or provide personal information without verifying the authenticity of the lender.
- Use secure payment methods: Individuals should use secure payment methods like net banking, UPI, etc. to make loan payments. They should avoid making payments through unsecured payment gateways or through cash transactions.
Loans against debit cards are a convenient way to access credit in times of emergency. However, individuals need to be
cautious while availing such loans to avoid falling prey to scams. It is important to do thorough research and verify the authenticity of the lender before applying for a loan against a debit card. One should also ensure that they are using secure payment methods and never share personal information like debit card details, bank account numbers, and PINs with anyone. By taking necessary precautions, individuals can protect themselves from scams and enjoy the benefits of loans against debit cards.
It is also important for the government and financial institutions to take measures to prevent scams in the loan against debit card scheme. There should be strict regulations and guidelines in place to ensure that only legitimate lenders can offer such loans. Financial institutions should also invest in cybersecurity measures to protect their customers’ personal information from online frauds and cyber-attacks.
Loans against debit cards are a useful financial product that can help individuals meet their emergency financial requirements. However, it is important to be aware of the scams prevalent in the scheme and take necessary precautions to protect oneself from falling prey to frauds. With the right measures in place, loans against debit cards can be a safe and convenient way to access credit in times of need.