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10 Signs Of Loan Scams

According to the Aite-Novarica Group, 47 percent of Americans experienced financial identity theft in 2020.

The group’s report, U.S. Identity Theft: The Stark Reality, found that losses from loan scam cases cost $502.5 billion in 2019 and increased 42 percent to $712.4 billion in 2020.

Potential con artists target individuals who are in need or most inclined to receive a bogus offer. You can fall victim to a loan scam if you’re not vigilant, and you could lose money.

You can understand how to verify the legitimacy of a lending firm and prevent becoming a victim of theft. Here are some10 common warning signs that point to a possible loan scam.

Top 10 Signs that you might fall victim to loan scams


A loan scam is a means for con artists to gain your SSN (Social Security Number) or charge you money without really granting you cash.

There has been a rise in these loan scams recently. Here, we attempt to explain the important red flags to watch out for if you come across one.

1.  Your credit report is irrelevant to the lender

Reliable lenders state clearly that they will require you to check your credit report, which may include all three main credit bureaus – Equifax, Experian, and TransUnion.

To ensure that you’ll be diligent about repaying a loan, usually lenders require to know whether you hold a record of making payments in timely installments.

Fraudulent companies are unconcerned about your credit rating. They look for high-risk customers who have a higher chance of defaulting on their borrowings and hence, succumb to exorbitant late interests and fines.

There are trustworthy lenders who provide bad-credit loans. They consider factors apart from your credit history when finalizing if you are eligible or not.

Prior to offering a loan, such lenders will usually ask for details like your earnings, work history, and qualifications.

Hence, do your homework and ensure you are contacting a lending firm that keeps count of your past financial history, even if it is not perfect.

For example, if you wish to gain more insights into how to avoid scams from fraudulent lenders, you can check out this comprehensive loan fraud guide from

2.          The lender isn’t authorized to operate in your region

Lending firms have an obligation to be registered with the FTC (Federal Trade Commission) in the jurisdictions where they operate.

Verify the company’s site for a rundown of places where it is legally allowed to do business. You may be dealing with loan fraud if a lender is not listed in a registered state.

Cross-checking the registration serves as a vital step in making sure that you’re dealing with an authentic firm and distinguishing frauds from real organizations.

Therefore, before sending over financial and personal information, double-check that lenders are licensed in your area. They don’t possess the authority to lend you money if they do not function in your region.

3.          The lender gives unsolicited calls and sends unwanted emails

35% of UK consumers say their trust in banks has decreased due to persistent scams spoofing brand names.

One of the primary reasons for this are unwanted calls from fraud lenders.

Unless you filed for a credit and are getting preapproved calls depending on the credit record, you won’t receive unwanted calls from creditors. It’s most probably a bank loan fraudster if you get an unexpected call.

Be cautious if you get an easy credit offer on your mobile, in your email inbox, or via a face-to-face pitch.

As per FTC (Federal Trade Commission), giving a loan via phone and asking to pay prior to delivery is illegal in the US.

A professional lender will never approach you through phone, direct email, or door-to-door canvassing. Search for lenders who promote in conventional print and internet publications.

4.          The lending firm demands your prepaid card

Some con artists are known to demand borrowers’ prepaid or gift cards, stating that they are required for insurance, deposit, or charges.

This is certainly a rip-off. Fees for your request, assessment, or credit history may be charged by authorized financial organizations, but those fees are subtracted from your borrowing.

The demand for a prepaid debit card is a major red flag. It’s completely undetectable, and if you have provided it to a creditor, you will not be able to report it as theft.

When interacting with a creditor, never use undetectable payment methods such as a gift card, debit card, or bitcoin. Accept wire transfers, direct deposits, or checks that can be deposited into your bank account.

5.          There is an absence of a physical address for the lender

Each lender you’re shortlisting must provide you a proper address. For your verification , check it on Google Maps.

Some companies that execute loan scams will provide addresses, which are essentially empty buildings, so double-check.

Reject the firm when you can’t find any proof of a specific address. Several fraudulent firms operate in an untraceable manner in order to escape legal repercussions.

Don’t conduct your dealings with a lender that can’t produce a physical address, and double-check the address before proceeding.

6.          Payday loan lenders who do not have a secure website

Did you know that 12 million Americans make use of payday loans each year?

Well, not only do payday loans demand exorbitant interest rates but they also are responsible for a majority of loan scams. One way to make sure if they are genuine is by checking their website.

Bank websites must be secured with a SSL (Secure Sockets Layer) certificate since they manage huge amounts of sensitive information such as birthdates, SSN (Social Security Numbers), and login details. An encrypted link across your pc and the borrower’s website is made possible through SSL.

When looking for a personal loan, make sure the creditor’s website is secure by scanning for the “https” prefix rather than “http” in the web address. It’s possible that the site is a fraud if it’s not secure. Before supplying any information, double-check the lender’s authenticity.

7.          There is no clarity on the fees or interests

Scammers will not clearly display their fees on their websites or reveal them when questioned. They could also inform you that you have been authorized for a credit and afterwards demand payment in advance.

Fees that are levied after the loan has been approved are a red sign.

The FTC advises you to avoid any company that engages in this activity, especially if you’re informed that the money is for “process,” “coverage,” or “documentation.”

Reputable lenders can impose request, credit history, or processing fees, which you will know prior to submitting an application. Legitimate lenders inform you of these expenses beforehand. It could be a fraud if you’re charged fees you weren’t expecting.

8.          You feel forced to apply for a loan

Analyst Juniper Research predicts that online payment fraud will reach a cumulative $206 billion in the four years to 2025, which is ten times the net income of Amazon.”

The above statistics, alongside many others, are trends you must be aware of to avoid loan scams. If you possess clarity on the current financial situation, you won’t be pressured to apply for a personal loan even under dire circumstances.

When looking for a personal loan, be wary of offers that are only valid for a limited time or loans that have extra urgent application criteria. If these are some of the conditions that try to take advantage of your financial distress, you need to steer clear of the same.

Reputable lenders typically offer consistent lending options depending on aspects like creditworthiness and current personal loan rates.

9.          Online reviews are bad

When it comes to eateries, museums, and films, user reviews are very significant. They can also assist you in finding a reliable lender.

You simply Google the company or person’s name, as well as Facebook, the Better Business Bureau, and other lending-related review sites.

Take note of any complaints or negative reviews. It’s a red flag if there’s uniformity across multiple locations, with everyone having a negative opinion.

10.     Poor customer service and communication

Reputable lenders have a phone line you can call to receive answers to your questions. You should not give the organization your business if you are not satisfied with the customer service. Also, don’t settle for phone robots. You should be able to communicate with someone.

There are a few indicators that should cause you to be concerned right away. If there are mistakes in language, punctuation, grammar, and/or syntax in an email message, be wary.

At the very least, that shows a lack of professionalism. It could also suggest you’ve met someone in a foreign country who isn’t subject to US law enforcement.


We have mostly discussed the warning signs of loan scams.

Here are some tips for you to follow in case you spot a scam.

  • Notify your local authorities as early as possible if you have been a victim.
  • Inform your local prosecutor as well as the FBI (if the firm is located in a different country).
  • The FTC (Federal Trade Commission) and the BBB (Better Business Bureau) will also be valuable resources.
  • You can report the scam to the FBI, the National White Collar Crime Center (NW3C), and the Bureau of Justice Assistance’s Internet Crime Complaint Center (IC3) (BJA).
  • Report it on the search engines, such as Google, Yahoo!, Bing, DuckDuckGo, or any other when you feel a website is created to look authentic in order to collect personal information from individuals.

Let us know in the Comments section below if there are other signs than the ones mentioned above that helped you to spot a loan scam.

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