Loan Phone Scams: Know Your Risk if You Have Debt
With consumer debt in the United States continuing its rapid increase - reaching nearly $3.4 trillion last year, according to the Federal Reserve - money is already a high-stress point for those in debt.
Are you one of them?
If so, protect yourself from further financial strain by knowing your risk for fake loan and loan refinancing phone scams. Scammers target victims with poor credit history or debt, particularly college students and recent grads with student loans.
These convincing, criminal callers can be hard to resist as they offer promises to alleviate your debt burden. But ultimately, they're looking to add to it for their own gain.
How Loan Phone Scammers Trick You
Fraudsters often impersonate financial institutions, the Better Business Bureau, or federal agencies like the Department of Education using caller ID spoofing to appear legitimate. They then try one or more of the below tactics:
If you have debt or poor credit history.
Loan scammers may call offering to help you recover by guaranteeing you a loan. You're asked to pay a simple, advanced fee to submit your application and release the funds.
However after you pay up, they'll disappear - without following through on the loan offer.
If you have an existing loan or loans.
Loan scam callers may offer you options to consolidate, lower interest fees or lend you money to eliminate your loan debt altogether.
They'll work to get you to disclose personal information, like your Social Security number or bank account number - which they can then use to access your funds. Or, they might charge you bogus processing fees for services you could get for free if obtained directly through a legitimate institution.
How to Spot a Loan Phone Scam
Regardless of scammers' tactics, be wary of any unsolicited financial offers made over the phone - particularly those that seem too good to be true. Tell-tale signs of a fraudulent offer include:
- The caller requests personal information - but doesn't care about your credit history.
- The caller guarantees you'll get a loan or loan assistance, no matter what.
- The caller claims you've been approved for a loan or loan assistance, but requires an upfront payment to cover insurance or processing "fees" often by wire transfer.
- The caller uses high-pressure techniques, claiming immediate action is required to take advantage of their offer.
How to Protect Against Would-Be Scammers
If you receive any unsolicited calls with a loan or loan assistance offer - hang up immediately and report the occurrence to the FTC's Complaint Assistant.
You can also check the legitimacy of a caller by verifying if the stated company exists with your state Attorney General's office. Lenders and loan brokers are required to register in the states where they do business. Then, look up the company's phone number using CallerSmart's reverse lookup phonebook and call back to check if they were the authentic source of the phone offer you received.
If the call was indeed fake, report the number using CallerSmart's caller ID app for iPhone and help warn others about loan scams. If you don't have an iPhone you can still search unknown phone numbers with our online phone book available on our website.