Falling victim to a scam is easier than we might like to think. Unfortunately, loan fraud is all too common, and the methods scammers use are numerous and varied. The good news is, by becoming aware of some of the common signs you’re being targeted, you can better protect yourself against these scams.
Loan fraud could involve a scammer stealing your identity to take out a loan in your name, or a fraudulent loan company that requests an upfront fee for a borrowed sum that never arrives. Scammers may also replicate loan communications you’re expecting to receive, such as from companies you’re already in an agreement with – they can then trick you into making repayments to them, instead of the legitimate company.
In this guide, we share three signs to look out for to avoid falling victim to loan fraud.
Cold calls and unusual communications
Calls, texts, emails or other communications that seem to appear out of the blue may not be from a legitimate, trustworthy source. Scammers often cast a wide net, sending out various communications to unsuspecting potential victims in the hope that someone will fall for their trap.
If you do pick up the phone to a cold caller, make sure not to give any personal information away – even the smallest details about yourself could help a scammer to gain access to your sensitive information. No loan company will reach out to an individual directly to offer their services if that person hasn’t already gotten in touch to enquire.
In written communications, be wary of incorrect grammar, unusual fonts and generally unprofessional, suspicious content. While fraudsters will often try to impersonate legitimate companies, the content of their communications may contain clues that they’re operating under false pretences.
An untraceable business
Similarly, you’ll want to draw your attention to the contact details provided by any supposed loan company. Check to see if their telephone number matches the one displayed on their official website, and look out for emails from email addresses that seem suspicious. Remember to read the full address – scammers can make it seem like the ‘quick name’ the email appears under is legitimate, but when you click for the full email address, it becomes clear that it’s not correct.
When taking out a loan with any provider, you should always make sure they’re traceable. For example, they should always have a physical address connected to their company. You can look them up on the government’s Companies House website.
An agreement that’s too good to be true
It’s easy to give into a loan company that claims you’re guaranteed to be accepted for a loan, or that offers a significant sum of money for minimal interest fees, particularly if you don’t have a high credit score. If a loan agreement sounds like it’s too good to be true, then it probably is.
Before taking out any loan, think about whether it makes any financial sense for the company to be offering it to you. Loan providers are businesses, after all, so if they seem to be giving more than they’re receiving, they’re unlikely to be legitimate.
What should you do if you spot the signs of a scam?
If you’re unsure about whether or not a loan offer is a scam, it’s best to stop all communication immediately. Share your concerns with your bank so that they can keep any eye on your transactions, and make sure to change your passwords on any accounts you have. You can also report suspicious communications on the government website.
It’s especially important to be wary if you’re part of a group that’s vulnerable to loan fraud, such as seniors, young people, or people with low credit scores. Low-income households are also susceptible to loan fraud, with a 2024 survey finding that of those declined for credit, 16% turned to a loan shark (an illegal lender) instead.
While financial scams are all too common, these three tips will help you to spot – and protect you from falling victim to – financial fraud.
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