Loan Scams: What are They and How to Prepare

Imagine you are clicking through a loan offer email, feeling hopeful after being denied for a loan the previous day. Maybe your credit score needs work, so you weren’t surprised by the denial. But today, this email offers a guaranteed loan, regardless of credit history. All you have to do is pay a fee...

And so begins a typical loan scam.

What is a loan scam?

A loan scam is a fraudulent scheme designed to deceive individuals or businesses into giving money or personal information with the false promise of receiving a loan in return. These scams typically involve fake lenders who advertise attractive loan terms such as low-interest rates, flexible repayment options or guaranteed approval, luring victims into applying for the loan.

Once the victim provides the requested upfront fees, sensitive personal information or access to their bank accounts, the scammer may disappear with the money or use the information for identity theft.

Loan scams can take various forms, including online advertisements, unsolicited emails or phone calls, and fake websites posing as legitimate lending institutions. To avoid falling victim to these deceptive schemes, it's essential for individuals to exercise caution and thoroughly research any lender before providing any money or personal details.

How do loan scams work?

Email is often a preferred vehicle for scammers to hoodwink innocent victims — like the person in our opening example.

In fact, OneMain is aware of scams in which fraudsters are using OneMain Financials’ (OMF) name in their fraudulent loan offers. The scam uses OneMain Financial’s name, logo, and at times branch contact information as part of the scheme. The scammers can exploit the victim’s, phone, text and email accounts with wording and/or documents posing as OneMain Financial representatives.

Here's a typical email example where a scammer fraudulently uses a legitimate business name without the consent or knowledge of that business:

Are you at risk for a loan scam?

Everyone is at risk for loan scams. Newly released data from the Federal Trade Commission's Consumer Sentinel Network shows that consumers reported losing more than $10 billion to fraud in 2023.

Loan scams pose a significant risk, however, to individuals across specific demographics such as the elderly, because scammers use tactics that exploit people’s vulnerabilities and their need for financial assistance. Factors that can increase susceptibility to loan scams include:

• Desperation for quick cash or urgent financial needs.
• Lack of awareness about legitimate lending practices and common scam tactics.
• Limited understanding of personal finance or lending terms.
• Trusting nature or susceptibility to persuasive marketing tactics.
• Engaging with unsolicited offers or unfamiliar lenders without proper research.

Several other scams to be on the lookout for include Lottery and Romance scams.

How to check if a loan company is legitimate

As you can see, scammers often pose as legitimate, credible lenders, and OneMain works hard to monitor third parties misusing our name. Our team members are trained in how to recognize and report fraud, so they can aid customers who have been victimized by a scammer who fraudulently poses as a legitimate business.

Watch out for these red flags when reviewing loan offers:

• Guaranteeing approval and/or not checking your credit history.
• Asking you to pay fees up front before receiving loan funds, supposedly for insurance, taxes or collateral.
• Instructing you to make your fee payments by purchasing or placing money on debit or gift cards (e.g. Google Play cards).
• Instructing you to make your fee payments via peer-to-peer payments, such as PayPal, Venmo, Cash App or through cryptocurrency.
• Continuing to ask for fee payments until you either decline or run out of money; also, asking you to overdraw your checking account to pay the fees.
• Advising they will put money in your financial institution’s bank account to show good faith, for you to then return the payment to them.
• Emailing you from a personal email account such as gmail.com instead of a corporate account such as omf.com. Look at the email address. If it ends in an account name that is not consistent with the official name of the organization, you should be skeptical. For instance, if it ends in anything other than @OMF.com, it is not from OneMain Financial.

The FTC offers these additional ways to tell if you’re being scammed:

• The lender is not transparent about their fees when asked, or they change as the transaction progresses.
• The lender asks for money or payments to be wired to an individual.
• The lender uses a website that is not secure, has a domain name that doesn’t match the company’s name, or uses a “copycat” name. The lender uses pressure
• tactics or becomes agitated by your reluctance to pay fees.

What should I do if I get scammed?

If you find yourself ensnared in a loan scam, it's crucial to act swiftly and strategically to mitigate potential damage.

Falling victim to such scams can be distressing, embarrassing and financially crippling. But whether you've been deceived by promises of quick cash, low-interest rates or no credit checks, take these steps right away to address the situation promptly.

Report your situation immediately to the following agencies:

• The Federal Trade Commission’s fraud report page or call 877-438-4338
• Your state’s Attorney General office
• The FBI Internet Crime Complaint Center if you’ve been targeted online
• The Better Business Bureau Scam Tracker

If you’ve been targeted by someone posing as OneMain, contact us immediately so a team member can assist you.

Take these steps to protect your information and help prevent further financial loss:

• Stop all contact with scammers. Do not speak to them anymore. Do not give them information, send money or gift cards.
• If you have given the scammers your personal bank information (account, PIN, credit card numbers, etc.), please contact the issuing financial institution, tell them what happened and ask what you should do next.
• If you gave sensitive personal information to the scammers (e.g., social security number, date of birth), consider contacting the credit reporting agencies to place an Extended Fraud Alert with your phone number and/or freeze your credit report.

Equifax - 800.525.6285 or www.equifax.com
Experian - 888.397.3742 or www.experian.com
TransUnion - 800.680.7289 or www.transunion.com

Strengthen your cybersecurity know-how with OneMain.

Loan scams pose a significant threat to unsuspecting people seeking financial assistance. By understanding the various tactics used by scammers and remaining vigilant, you can better protect yourself from their schemes. We are committed to keeping people informed and ready. Use our resources to learn more about scams, tips for identifying credible lenders and how to avoid fraud schemes.

---

1. https://www.ftc.gov/news-events/news/press-releases/2022/02/new-data-shows-ftc-received-28-million-fraud-reports-consumers-2021-0
*This article was updated from it's orginal posting in 2022.