Fake loans scam on the rise

The National Credit Regulator continues to warn the public to be aware of fake loan scams.

With people having to dig deeper into their pockets after the festive season, many might be tempted to seek assistance in the form of loans. These loans come with many terms and conditions but the National Credit Regulator (NCR) has warned consumers to be wary of fake credit providers who attempt to entrap consumers in loan scams. According to Jacqueline Peters, manager of Investigations and Enforcement at NCR, these scams tend to target those who are in distressed financial circumstances and looking for a loan.

According to Peters, these scammers use words such as ‘blacklisted and debt review clients welcome’ to lure unsuspecting clients. They then set up loan terms that sound decent but are in fact illegal as they are not authorised to provide such a service. Peters added that the increase in these types of scams comes at a time when credit approvals have decreased and consumers are finding themselves to be financially stretched.

These fake credit providers would generally use the details of legitimate credit providers and attempt to make one believe that they are endorsed by government agencies such as the NCR – be careful that you are not be misled and look out for the typical signs.

Here are tips from the NCR to help consumers avoid scams:

• Never borrow from an unregistered credit provider.
• Treat all unexpected calls, emails and SMSs with caution. Don’t assume they’re genuine, even if the person seems to know some basic information about you, such as your name.
• Look out for the name on all emails, in case it is a ‘clone company’ pretending to be a real credit provider.
• Do not pay any upfront fees to release your loans. The National Credit Act does not allow credit providers to request upfront payments for the release of a loan. If the credit provider makes this request, do not engage further and report to the relevant authorities, such as the NCR or the SAPS.
• n Be aware of platforms and hidden fees included for sourcing a loan.
• Don’t be pressured into acting quickly. A genuine credit provider won’t mind waiting if you want time to think and compare the costs of credit by using a quotation.
• Do not engage with credit providers who do not conduct affordability assessments.
• Never give false or incorrect information on a credit application about your financial affairs. Always disclose your financial obligations and living expenses fully.