In 2017, there was a 10% drop registered in loan scam complaints and fraud, too. The Federal Trade Commission in USA reported American consumers lost around USD 905 million to pesky scammers, which was USD 63 million in 2016. The reduction in complaints was possible by educating people about scams and raising awareness levels, besides enforcing regulations to reduce fraud, millions of dollars were lost due to scams and fraud.
Financial scammers proliferate in the digitalised age, preying on people who are denied loans from banks or registered institutions. They locate their targets, as a loan rejection indicates need for money and willingness to take risky measures to secure funds. A recent study by the Wharton School of Business at University of Pennsylvania shows that Seniors are easy targets for financial scammers but Baby Boomers and Millennials are also equally impacted. Research further uncovers that about 33 % adults are victims of financial scammers.
How Scams Work
Scamsters generally lure their victims by offering easy loans with many perks, as they are able to have criminal access to financial data of victims without their permission or knowledge. There are plenty of ways to legitimate get money, like brokerage accounts, ETFs, adjustable mortgages, borrowing from your variable-rate mortgages, 401K, and payday lenders. All these platforms are only designed to ensure more financial scams. Online banking, digital processing of money, and wire transactions have enabled many more scams for the unwary.
Loan Scams and Loans to Avoid
Beware of some investments that are financial traps. A car title loan using your vehicle as collateral gets 50% of the vehicle’s value with high interest rates, 25 % per month, and repayment to be made within 30 days of the loan. The amount can be carried forward by another month, but you could lose your car or end up paying too much interest. The government has passed strict laws that limit such loans, which alone should send warning signals to you about avoiding them. Pawnshop loans operate on similar principles, and it is better to stay away from them! Overdraft protection loans and cash advance loans are more such loans to be avoided. Such loans will surely place you in too much debt, and without money, to begin with, debt is surely the last thing you do need. Turn to such debt-forms during extreme emergencies only. Private student loans are another loan rip-off to be avoided as interest rates normally exceed the interest norms fixed by federal standards. Also, these private institutions use variable rates, which is against your financial interests.
Warning Signs of Scams
Victims point out some warning signs they initially ignored to spot scammers, such as up-front fees. Should a lender ask for money without ever disclosing their fees, you should be warned. Legitimate lenders disclose payments to borrowers, including fees as part of loan costs. Loan offers must be in writing as phone offers are illegal. Wire transfers of fees are cause for concern and must not be done. Insist on a physical address if very necessary. A lender dis-interested in your credit history, is not a legitimate lender. Do your research before you enter any agreements, after verifying whether the business is legitimate. Avoid all loans, but for emergencies, there is no option. Be careful, smart, and ever-vigilant!