Loan scams are all too common across Canada, putting a large population at risk each year of having their hard-earned money taken. Unfortunately, Squamish residents are not immune to these scam artists.
In fact, the Better Business Bureau of Canada reports that people from across Canada have given up millions of dollars to all types of financial scams over the past two years.
What’s even scarier?
Recovering money that’s been lost to scammers is rare. This is a high price to pay for a simple mistake.
Canadians are dependent on loans
Being approved for a loan can be life-changing for many people. Having access to the extra money can help pay the bills and put food on the table – or not.
Cue private online lenders.
Private online vendors have improved the financial landscape for many. Often, these web-based resources are an alternative for people experiencing financial issues or those with denied loan applications from mainstream branches to access the funds they need.
However, the increase in online loan vendors has also spurred the number of personal loan fraud cases. Recognizing the signs of a loan scam can be the simplest and best defence against shady lenders.
How can you spot a scam artist?
Being asked to pay upfront
A recent Loans Canada survey found that nearly 45 per cent of credit-constrained Canadians who consider themselves financially knowledgeable agree that alternative or online lenders are permitted to ask for upfront payment because it adds additional security.
This misconception can be costly.
A licensed lender will never ask for money upfront. Often illegitimate lenders will push for a processing or insurance fee as a condition for approval. Don’t fall for this. Being asked to transfer money as a method to secure a loan is a sign that you’re dealing with scammers.
Guaranteed approvals don’t exist
Nothing in life is guaranteed, and this includes loan approvals. Legitimate lenders will always gather applicant information and evaluate creditworthiness before approving any deals. Guaranteed approval is a method of convincing applicants to pay upfront fees.
Guaranteed approvals are a scam – find out why here.
The pressure is on
Scam artists will often pressure those seeking loans to commit quickly. This leaves little time for people to become aware they’re being swindled. Be cautious if lenders have tight expiration dates as they can be a sign of a scam.
Do they have a legitimate address?
Loans Canada’s survey also identified that credit-constrained Canadians rarely call vendors to ask questions and conduct further research related to taking out a loan.
If there is no actual office or legitimate address, this could be a bad sign. Look for independent information on the lender and double-check if they have a physical office.
Knowledge is the best way to protect against scammers
As a way to help loan applicants to protect themselves, Loans Canada recommends researching lenders, looking for verified review sources and even seeking advice about loans from trusted friends or family members. These are all ways that Canadians can arm themselves with the information need to help them avoid falling for a loan scam.
“Loan fraud has seen an increase over the last few years,” says Loans Canada Chief Technology Officer, Cris Ravazzano. “Scam artists are impersonating many online lenders and similar websites, tricking Canadians into paying to qualify for fraudulent loans. We want Canadians to be aware of the issue to help inform and protect potential victims of this fraud.”
I think I’ve been scammed. What do I do?
If you’re among the thousands of people scammed each year, unfortunately, there isn’t much you can do after the fact. However, if you’re suspicious that a lender might be trying to defraud you, contact your local police and the Canadian Anti-Fraud Centre.