Loan scams, a growing form of fraud, specifically target individuals in debt. These scams, promising quick cash, often result in the loss of the victim's money. Understanding the warning signs and how to protect yourself is important to avoid falling into these traps. Much like debt consolidation scams, fraudsters exploit the vulnerability of those in debt. The most common warning signs are if fees are requested upfront or if they initiate contact with you.

Loan scammers often offer to lend money with guaranteed approval, usually by check or direct deposit, to help with financial difficulties. They typically contact their victims through social media, text, or cold calling. They want to obtain banking information and access online banking. Scammers pressure their victims to act immediately, creating confusion and causing them to overlook red flags. It's important to remember that if it sounds too good to be true, it probably is.

Most legitimate lenders have several requirements that you'll have to meet to qualify for a loan. These include having a minimum credit score, proof of income, and more. A major warning sign to look out for is if they request payments through untraceable methods such as gift cards, prepaid cards, or cryptocurrency. Scammers will often say that it is an "application" or "processing" fee, but there is no actual loan and you will be out that money.  No reputable financial institution will ever ask for payments in those methods.

It is important to research any company offering you a loan. Often, these fake companies say they operate from out of state and don't provide an actual physical address. Legitimate lenders must register in every state where they want to issue loans, and there should be a link on the company's website to their current licenses. You can also verify a company's license with your state's Attorney General's office.

If your personal or financial information is compromised, a scammer may attempt to use your credit to open accounts or loans in your name. We recommend contacting the credit bureaus (Experian, TransUnion, and Equifax) to put a freeze on your credit. You can also pull your annual free credit reports and review them for unauthorized activity.

Staying vigilant and informed is your best defense against loan scams. We're here to help!