personal loan fraud

Over the last few years, there has been a significant increase in the number of loan platforms across the country.

Most of the loan platforms are online loan platforms, and this has equally caused a significant increase in the number of personal loan frauds. Most business people are gullible, and as such, they do not conduct intensive research before applying for a loan on any platform, thereby ending up being victims of personal loan fraud.

This article aims to open the eyes of business owners to what personal loan fraud is all about, how to identify it, and, most significantly, some of the frequently asked questions they might have in mind.

Ways To Identify Personal Loan Fraud

There are various ways to identify multiple loan frauds, and in this article, we will be looking at some of the most important ways you can do this. Some of them are;

  • The lender guarantees fast approval
  • The lender is not registered in your state Federal trade commission
  • The lender demands a prepaid card from you
  • The lender calls most often than normal

The Lender Guarantees Fast Approval

This is one of the most important things you need to look out for when applying for a loan to avoid personal loan fraud. Any lender that guarantees you fast loan approval without first asking you some important questions is a lender you should run from.

Before your loan application is guaranteed, you are required to answer some critical questions of which, one of the most important is your creditworthiness.

Before you are eligible to obtain a loan from any platform, your creditworthiness must be checked, and this is to know if you qualify for the loan you wish to apply for. If you have a high credit score, your loan application will likely be approved.

A high credit score is obtained by paying each loan you borrow from any loan platform within the time of agreement. If you owe any loan platforms, your loan application process will not be accepted.

This is why you should be careful whenever a lender promises you fast approval of your loan application without first checking some of the requirements. If you want to avoid personal loan fraud, take note of this.

Sometimes you can identify these personal loan frauds by some of the statements they make, such as

  • “Everyone is approved!”
  • “We don’t care about your past. You deserve a loan!”
  • “Bad credit or no credit? No problem.”

When obtaining a loan from any platform, ensure you are working with a lender interested in your past financial records, even if it is not good enough.

Read TooFake Loan Apps in Nigeria

The Lender Isn’t Register In Your State

In each state of the country, each financial platform, be it a loan or banking platform, is required to register in the states they conduct business in.

One of the ways to identify personal loan fraud is to be on the lookout for this. If your lender is not registered in your state, chances are that the lender is Fraud.

One of the ways to check if your lender is registered in your state is by checking the lender’s website to help verify the list of all the states where it legally conducts business. If your state is not included, chances are that they are frauds.

The Lender Demands a Prepaid Card and an Upfront

This is among the crucial things you need to look out for before obtaining a loan from any online or offline platform.

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No loan platform across the country will ask you for an upfront payment before your loan application process is approved. If any loan platform asks you for such, chances are that it is fraud.

Another important thing you must be on the lookout for to avoid personal loan fraud is the demand from the lender to use prepaid cards as a means of payment.

Over the years, scammers have been known to demand a hidden system of payment, and this is to help them evade justice and investigation. So when a loan platform asks you for your prepaid card, chances are that they are fraud.

The Lender Calls Too Often

This is a critical factor you need to be on the lookout for. Any lender that calls you too often or writes too often to you during the loan application process, that lender is most likely to be a scammer.

According to the FTC, it is illegal for any company to offer a loan to any US  citizen over the phone or even ask you to pay before they deliver. This is a violation of the telemarketing sales rules.

This applies to almost all countries; if the loan platform you want to obtain a loan from calls you often or writes to you often, or if they try to get you to pay before your loan is approved, chances are that it is a fraud.

Another thing you need to ask your loan platform is if they have any physical address, most personal loan fraud happens because the borrower believes everything the lender said and doesn’t bother to ask important questions or make inquiries.

You need to ask the loan service provider if they have any physical address; if they say yes, you need to verify this to be sure before you can proceed with the loan application process.

When obtaining a loan from any loan platform, you must avoid personal loan fraud.

Frequently Asked Questions

What is personal loan fraud?

There are numerous definitions, but any loan application process that ends up extorting money from you can be called personal loan fraud.

Most online loan companies do this by requesting an upfront before they can offer you the loan. When you see this, chances Some popular ones are Loan fee scams: Scammers may try to provide you with a low-cost loan in exchange for hundreds or thousands of dollars of fees upfront.

How do I know if I have loan fraud?

There are various ways to know if you have been a loan fraud, of which we have discussed a few of them in this article. However, if you want to know how to prevent any fake loan platform from scamming you, do the following.

  • Verify the physical office address of the lender.
  • Do not transfer any money or fees upfront.
  • Call the actual company to check if the offer is genuine or not.
  • If the loan sounds too good to be true, it probably is.
  • Read the fine print of the terms and conditions.

How do I report loan fraud?

It is very easy to report loan fraud, to report loan fraud as fast as possible, do this; Report the incident to your bank/NBFC/financial institution and police station immediately, get your account/card blocked, and let the cyber-crime cell of your area know that you have been defrauded.

As a victim, it’s your responsibility to report your fraud incident to the cybercrime cell of your area.

Is loan fraud serious?

Loan fraud is a severe offense. However, the consequences may vary and thus depend on the scale of the fraudulent activities; however, there are some conditions that the implications of this personal loan fraud will result in 30 years in prison or over 1 million dollars in fines. This is how serious it is.


In 2020, the Federal Trade Commission reported that about $3.3 million was lost to loan sharks and scammers.

We understand that emergencies and needs may spring up when you least expect them. However, if you do not stay alert and wise, you may become a victim of personal loan fraud. We believe that this article was eye-opening.