Have You Fallen For An Online Scam? Here Are 4 Warning Signs

online loan scams

Malaysians are easy prey to online scam predators.

Despite the stories we hear and read, there are still many others who lose insane amount of hard-earned money to online scams. You could be next!

Here’s what you need to know about online scams:

Know the works

Many online scams today involve personal loans, the first step to avoid being scammed is to know how loans work. A personal loan works very much the same as any other type of loan. Basically, you borrow money from a bank or lender so that you can pay for the things you need.

An agreement will be drafted by the lender where repayment details, interest rates and other miscellaneous details are spelled out.

This entire process does not require the lender to pay any sum upfront. Remember, it is illegal for a lender to ask for pre-payment.

It is also important to find out who the borrower is. Are you applying for a loan from a licensed financial institutions such as a bank, or a money lender or credit company? Loans from licensed financial institutions will be your safest option as they are regulated by the central bank.

Know the scams

Online scams are aplenty.

'Advance fee' loan
This common scam gets the borrower to pay an advance fee at the time of approval. This is the modus operandi for most loan scammers, but consider this – it really doesn’t make sense for you to pay the money you don’t have just to get a loan.

Another common tactic used by scammers is phishing. In this case, fraudsters would impersonate a business. This is to trick you into giving out your personal information such as banking and credit card details as well as passwords.

A scammer might impersonate a well-known financial institution or a loan company with a legitimate looking website, or the usual way which is via email.

While it is difficult to keep tabs on the latest scams, unless the victims appear on the news, there are certainly warning signs that borrowers can be aware of:

4 Warning Signs of a Loan Scam

1. A lender who is not interested in your credit history

There are many loans and credit cards to suit a variety of purposes such as starting a business or consolidate your debt. A lender who does not care about credit history is worrisome. Ads that say “No hassle – fast money guaranteed” or “We don’t care about your credit. This loan is yours” are too good to be true and need to be approached with caution.

Legitimate sources will only approve a loan after they have assessed borrowers’ credit history and confirmed the validity of information on the application form.

2. Upfront payment

When a lender demands upfront application fee, tread the water carefully. In most cases, legitimate lenders will not ask the borrowers to pay anything before the borrower receives the loan.

Some scammers will call this “processing fee” or even tell the borrower that such upfront payment is required due to bad credit health. These fees, if required, are usually deducted from the loan amount before disbursement.

3. Pressed to act immediately

Scammers will press you to give personal information or send money before getting any paperwork done. They’ll say it is a one-time offer or you have to act now if you don’t want to miss interest-free installments. Always insist on the paperwork and go through the fine prints before applying for anything, especially if it involves money.

4. Requesting personal information

Never give your credit card or bank account information over the telephone or Internet unless you know why such information is being requested and which company is doing the asking.

Know the services

In this era, fraudsters have come out of the woodwork to attack unsuspecting consumers, and one of the common ways they do so is with online loan scam. Over the years, the means of their attack have become more sophisticated. On one hand, you have to prevent yourself from getting scammed but at the same time, you don’t want to lose out on new financial services that benefit you by being too cautious.

With the emergence of financial technology, the number of things that we can do without leaving our home have increased but it also increases our exposure to online scams. It is crucial to be aware and make informed financial decisions.

Comparison websites such as iMoney offer readers comparison tools and valuable financial information.

The difference is, financial platforms like iMoney will only assist in loan applications with licensed financial institutions. iMoney does not lend money directly to borrowers, but instead provide the services to help borrowers apply for the best loans. The service is completely free for the consumers, so you don’t have to pay a single cent to apply on our website.

What iMoney does is to curate, recommend and help with the application, where visitors will be assisted to apply, be it personal loan, credit card, broadband, or insurance. The visitors will then be directed to the relevant parties to proceed with the application.

Know yourself

When it comes to applying for a loan from a legitimate source, there is no shortcut. Borrowers and lenders need to fulfill certain criteria before a loan transaction can be approved and carried out.

If you want to take a loan, ask yourself why you need one in the first place. If you do not qualify, you might want to get help to assess your financial health to be able to get approved next time.

Just remember you can’t game the system. Borrowing from unlicensed moneylenders or loan sharks will harm you. If something is too good to be true, it is usually a scam. Falling for it will put you in an even worse financial situation than you were before.

Take a step back and think things through first. Always make informed decisions when it comes to your finances to safeguard yourself from online scams.

This article was first published in October 2016 and has been updated for freshness, accuracy and comprehensiveness.

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