Loan scams on the rise

An increase in scammers targeting people has raised alarm bells
An increase in scammers targeting people has raised alarm bells

My inbox is flooded every day by companies claiming to offer really cheap loans. Many of these emails are using names of well-known lending companies such as Direct Axis or RCS. This is the modus operandi of loan scammers – they pretend to be a legitimate lender and even fraudulently use the registration number of a legitimate credit provider to appear authentic.

In their email or SMS solicitation, they claim to offer blacklisted people loans, and the interest rates offered are ridiculously low. For example, one scam is offering consolidation loans as low as 3.5% a year. This alone should be a warning sign to any potential borrower.

If someone is prepared to lend you money when other institutions are not, and at an even better rate than a prime customer, you need to be asking some serious questions.

In all loan scams, the loan provider asks for an upfront payment to release the loan. This is usually for “legal fees”, “insurance” or “bank costs”. Once you have paid, they ask you to pay another fee you didn’t know about. As you have already paid several thousand rands, and you’re now more desperate than ever, you pay the next amount as well.

This continues until you realise you have been scammed – and then the “lender” just disappears.

Read: Beware the loan scam! 

In some cases, victims who have tried to confront the scammer have been bullied, and scam artists have even demanded that the victim pay them the value of the full loan even though the victim never received a cent.

Apart from the ridiculously low interest rates, these scams are very easy to spot because, under the National Credit Act, no credit provider is allowed to ask for upfront fees. So, if a lender is suddenly asking you for money before they give you the loan, walk away and report them to the National Credit Regulator.

They may harass you and threaten you with blacklisting, but they cannot enforce this and it is just a way to intimidate you.

If you have already fallen victim to this kind of scam, notify your bank, which will have a fraud division that cooperates with the other banks and they can take steps to freeze the scamster’s account before the money is withdrawn. Go to the police to open a case and get an affidavit as this will be required by your bank and the regulators to pursue the case.

  • To contact the National Credit Regulator, call 086 062 7627.
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