Lending scams are fraudulent schemes in which individuals or companies offer loans to unsuspecting individuals or businesses, to steal their money or personal information. These scams can take various forms, but they all promise quick and easy access to funds.
Scammers are constantly evolving their tactics and finding new ways to trick people into providing their information or paying upfront fees for loans that never materialise. It’s important to stay vigilant and keep up to date with the latest scam trends so that you can recognise when something is too good to be true.
Three Most Common Online Scams
Here are some of the most common lending scams in Australia:
Data Phishing
Data phishing is a common scam that refers to the practice of tricking people into giving away their personal or confidential information through fraudulent electronic communications. This can be done via emails, text messages, or even phone calls, and the goal is usually to obtain sensitive data such as login credentials, credit card numbers, or other personal information that can be used for fraudulent purposes.
Phishing scams are becoming increasingly sophisticated, with scammers using techniques such as social engineering to make their messages appear more legitimate and convincing. In Australia, organisations such as the Australian Cyber Security Centre (ACSC) and the Australian Competition and Consumer Commission (ACCC) are working to raise awareness about the dangers of data phishing and to provide guidance on how to avoid falling victim to these scams.
Predatory Loan Apps
Predatory loan apps use deceptive or misleading practices to take advantage of vulnerable borrowers. These apps may offer loans with extremely high-interest rates or hidden fees, and they may use aggressive marketing tactics to lure borrowers into taking out loans that they cannot afford.
Some predatory loan apps may also collect personal data from borrowers and sell it to third-party advertisers or debt collectors, potentially putting borrowers’ privacy and security at risk and increases chances of identity theft.
Payday Loan Call Scam
Payday loan scams are another type of scam where criminals pose as payday lenders or debt collectors and use intimidation tactics to extort money from unsuspecting victims. They may contact people via phone, email or text message, and claim that the victim owes money on a payday loan. They may threaten legal action or claim to be from a government agency, such as the Australian Taxation Office or the Australian Securities and Investments Commission (ASIC).
Online-Safety Practices You Should Do to Avoid Lending Scams
Make sure you are accessing a secure and safe website or app
Accessing a secure and safe website or app is an important online safety practice that can help you avoid lending scams. When you’re looking for websites or apps where you can submit payday loan applications, it’s crucial to make sure that you are accessing a secure and safe platform.
To do this, you should look for the padlock icon in the address bar, which indicates that the website or app uses encryption to protect your data. You should also ensure that the URL starts with “https” instead of “http,” as the “s” indicates that the website or app is using a secure protocol to protect your data.
Always sign out of websites you visit
Signing out of websites you visit is an essential online safety practice that can help you avoid lending scams. When you’re using lending websites or apps, it’s important to remember to sign out of your account after each session, especially if you’re using a shared device or a public computer.
By logging out, you ensure that your session is closed, and your account is secure, making it less likely that unauthorised users can access your personal and financial information. Additionally, you should use strong and unique passwords for all your accounts, enable two-factor authentication whenever possible, and clear your browser history and cache regularly.
Do not accept offers that are too good to be true; Always read the fine print
To avoid these scams, it’s important to research the lender and read the fine print carefully. Make sure you understand the terms and conditions of the loan, including the interest rate, fees, and repayment terms. If the terms are unclear or confusing, ask the lender for clarification before accepting the loan.
Verify that the online lender you are eyeing is legitimate
To verify the legitimacy of an online lender, you should research the lender thoroughly. Check their website and read customer reviews and ratings to see what other borrowers are saying about them. Be cautious of lenders who ask for personal or financial information before they’ve been verified, as this could be a sign of a lending scam. Additionally, be wary of lenders who promise to approve your loan application without conducting a credit check, as this is often an indication of a lending scam.
Summary
Avoiding lending scams is crucial for protecting your personal and financial information, as well as your financial well-being. Lending scams can result in identity theft, financial loss, and damage to your credit score, which can take years to repair. By avoiding lending scams, you can protect yourself from these negative consequences and ensure that you’re working with legitimate and trustworthy lenders.
