We are asking all of our readers to take action with us and programs like Carte Blanche to expose fraudulent online loan operations, loan sharks and unethical loan practices by many online loan companies. Share this article with your friends and help us to help all South Africans make better loan decisions.
Carte Blanche recently did some solid coverage on a topic that sits close to the heart of the Fincheck team and is one of our core reasons for launching our online loan comparison engine with NCR registered lenders. This topic dives into fraudulent online loan operations, loan sharks and unethical loan practices by many online loan companies.
Online lenders fill an important role in personal finance as an alternative to traditional lending because it reduces the cost and complications associated with traditional lending. We should work together to flush out the sharks and fraudsters and make sure online solutions meet the needs of the consumers who can responsibly afford them.
Carte Blanche has shared some much-needed advice on how you can prevent falling victim to fraudulent online loan sites. As an online platform designed to help people make better loan decisions and presenting only NCR registered lenders, we want to share insights to help you further protect yourself when doing an online loan application.
You will be able to tick off the following 3 things when you are done with this quick read:
- Understanding the online loan application process
- Know your safety checklist
- What to do if you have been “frauded”
1. Understand the online loan application process
Most lenders offer an online loan application process these days. It’s simple, quick and mostly hassle-free. Unfortunately, because it is so convenient and simple to use, people become comfortable. They forget that it can be easy to copy this process as a fraudster and present an extremely believable online product at face value.
Remember the following few things when you are busy with the online loan application process.
Low level of commitment
The online process asks for no more than personal information commitment. In other words, you are only supplying basic personal information. The most sensitive of this will be your ID. The only danger here can be identity theft which requires quite a bit more than a trick up the sleeve.
This is only a “pre-approval” process which does a basic credit check to make sure you are a responsible lender and can afford the loan repayment agreement.
No financial commitment during the “pre-approval” process
There is no financial commitment during this process and this is often where most people get scammed. If an online fraudster presents a fake online site they only need to ask a few hundred or thousand people for a couple of hundred bucks before they make big bucks. R100 “administration fees” from a 1000 people means a few months of living a good life.
If the company asks for money during this “pre-approval” process you should immediately start doing the necessary research into them and tick off the safety checklist. Even if it is only a small amount of R100.
Only when you have an official loan offer from a reputable company will be a form of financial commitment to process the loan and debit future repayments.
Thoughtful communication and updates
Most fraudsters or scammers will not have the capacity or time to build decent communication channels to present you with updates regarding your loan application. There could be the occasional one that does, but most of the time this is another sign you are working with a professional.
Thoughtful communication could be a combination of updates or information sent through more than one channel. For example, it can mean short SMS or WhatsApp updates along with professional emails that will ask further information like FICA and also educate you on personal finance.
You will usually receive email, SMS or WhatsApp updates and an official offer from a legitimate online lender instead of short abrupt emails or SMS.
If you are feeling unsure at any point, you can use the safety checklist below to make a final call.
2. Your safety checklist
We have put together the following checklist that will help you filter out most of the online loan scammers. If you feel uncertain about your online loan application, tick all of the following boxes before taking any further steps.
[Yes/No]They are registered on the NCR
[Yes/No] They communicate and are responsive on social media and email communication channels E.g. email updates, SMS updates, FB Messenger or WhatsApp updates, social media activity
[Yes/No] The process originated through a special offer in an email or SMS (This is an immediate red flag)
[Yes/No] There are many online or social media reviews. This is also known as social proof
[Yes/No] They have a presence on HelloPeter or similar websites
[Yes/No] They do not ask for money until there is an official loan offer which you are approved for
[Yes/No] They only ask for fees associated with the loan origination and payback fees
Ultimately, it will still come done to whether you will feel safe to take the risk and you should do everything you can to feel safe when making your decision.
What can you do if you have been “frauded”?
Even with the best of intentions, you can fall prey to a scammer or fraudster. Unfortunately, being “frauded” can also mean a legitimate lender is milking you for money by making small debit orders. This is a topic Carte Blanche especially spoke about.
You can follow these steps if you need to report any activity that does not meet the requirements of the NCR and lending best practices:
- Leave online reviews to help others. Join our community group here and help others make better financial decisions
- Report the lender to the NCR
- Get assistance from the NCR or Ombudsman if you have been cheated by a legit lender
Online lenders and online loan applications are a great solution for many South Africans. Unfortunately, there are too many out there who want to benefit by putting people in misery.
We are asking all of our readers to take action with us and programs like Carte Blanche to expose fraudulent online loan operations, loan sharks and unethical loan practices by many online loan companies. Let’s work together to help all people make better financial decisions through responsible lending.