Key Takeaways
- How to check if a loan company is legitimate – Verify licensing with state regulators, check customer reviews, research accreditations, and avoid lenders that request upfront fees, guarantee approval, or pressure you to act quickly.
- Common loan scam warning signs – Scammers may create a false sense of urgency, harass borrowers, offer loans over the phone, or request pre-loan payments through untraceable methods like cryptocurrency or gift cards.
- Steps to take if scammed – Report fraudulent transactions to your bank, credit card company, or the Federal Trade Commission (FTC), and consider freezing your credit if your Social Security number has been compromised.
- The role of the Better Business Bureau (BBB) – The BBB provides company reviews, mediates disputes, and helps consumers verify a lender’s reputation before applying for a loan.
To check whether a loan company is legit, you should find out whether they are licensed. Also consider customer reviews, accreditations, business tenure, and lending history. CreditNinja is a legitimate loan company because we are a licensed lender who complies with state and federal regulations. We never have any hidden fees and are clear and transparent about our loan terms. A few warning signs that a lender is not legitimate are if they ask for large upfront fees before disbursing a loan, have a strong sense of urgency, offer loans over the phone, or guarantee approval.
How can you ensure your personal information stays protected? Learn how to check if a loan company is legitimate so you can safely apply for emergency cash.
What Is a Loan Scam?
A loan scam is a fake financial transaction offered by a person or entity that commits fraudulent activity. Scammers typically try to gain access to your Personal Identifiable Information (PII) to compromise your identity and finances.
These are a few examples of personal identification numbers:
- Your Social Security number (SSN)
- Individual Taxpayer Identification Number (ITIN)
- Credit card number
- Passport number
- Driver’s license number
Scammers use various deceptive practices to trick consumers into thinking they operate a legitimate business. Loan scammers typically create fake websites, company logos, caller IDs, and social media pages to impersonate legitimate loan companies. Everyone is at risk of working with fraudulent businesses, so it’s essential to know how to spot a loan scam.
How Common Are Loan Scams?
Millions of people become victims of loan scams every year due to realistic impersonations of legitimate loan companies. According to the Federal Trade Commission (FTC), Eight million fraud reports were filed in 2021! Unfortunately, there has been a steady rise in loan scams lately. Fraud reports increased by 70% from 2020.
In 2021, there were approximately 5.8 billion dollars in losses. Consumers also had roughly 2.3 billion dollars in losses from government imposter scams. These figures can be alarming, but thankfully there are bright red flags that signify you are working with a loan scammer.
Warning Signs of Personal Loan Scams
There are numerous debt relief scams online, so it’s critical to do thorough research before applying with a financial institution. Below are common tactics used by loan scammers that you need to be aware of. Knowing what to watch out for can make it easier to spot personal loan scams:
Sense of Urgency
Suppose you submit your contact information for an online personal loan, and the lender starts blowing up your phone or email inbox. In that case, you might be dealing with an illegitimate company.
Legitimate financial institutions do not pressure potential borrowers to apply. You may receive additional information about the company after inquiring. Still, you should not be bombarded with excessive emails, texts, or phone calls. If you feel like the lender is creating a sense of urgency, or do not encourage you to research and think about your loan decisions, it may be better to avoid further communication.
Harassing Behavior
Harassment is any unwelcome behavior from a person or entity. According to the Fair Debt Collection Practices Act (FDCPA), the following actions can be considered creditor harassment:
- Repetitive phone calls
- Coarse or offensive language
- Threats of violence
- Other behavior meant to annoy
Have you inquired about quick cash loans online and are now dealing with harassing behavior from the lender? It’s in your best interest to avoid working with that financial institution. Legitimate lenders do not harass potential borrowers. If a lender does display harassing behavior, you can report them to the Consumer Financial Protection Bureau (CFPB).
Guaranteed Approval
While there are lenders that have flexible qualification requirements (for example bad credit loans are flexible with poor credit history) take caution if you come across a lender that advertises personal loans with guaranteed approval. You may be in danger of personal loan fraud if you get loan approval before undergoing a credit check or providing income information.
But remember that guaranteed approval is not the same as instant approval. Many reputable online lenders promote instant approval because the approval process for legitimate personal loans is quick and secure. You may find instant approval with high risk personal loans versus standard personal loan options.
Pre-Loan Payment Requested
While reputable lenders may ask for application fees or have origination fees, you should never expect to pay money upfront before you receive loan funds or read a financial contract. You may not be dealing with a legit loan company if the loan company is adamant about payment for immediate payday loans or personal loans. Avoid working with any loan company that requests money through an untraceable payment option like cryptocurrency or prepaid cards.
Loan Offers Over the Phone
Many borrowers work with online lenders because they offer convenience and a faster approval process. But when you apply for online installment loans with instant approval, you should be cautious of lenders that make offers over the phone. It is illegal for loan companies to make loan offers over the phone and request an upfront payment. Online lenders should have a secure website that allows you to provide your personal and bank account information safely.
What To Do if You Paid a Loan Scammer
If you think you have been the victim of a loan scammer, it’s essential to take immediate action. The steps you need to take depend on how you made a payment to the scam artist.
- Debit or Credit Card — Inform a financial agent that there has been a fraudulent charge and ask for a payment reversal. A payment reversal allows you to get your money back from a transaction.
- Gift Card — Contact the company that issued the gift card. You may be able to get your money back if you explain that the gift card is part of a loan scam.
- Wire Transfer — Contact the company and inform them of the fraudulent transaction to potentially get a reversal payment. You can also report wire transfers through a bank or credit union by speaking with the fraud department. Explain the situation and ask the agent to reverse the wire transfer.
- Cryptocurrency — Unfortunately, cryptocurrency payments are usually not reversible unless the payee agrees to send the money back. However, you can try contacting the crypto company and explaining that you are the victim of an illegitimate loan servicer.
- Cash — Mailed cash payments can be intercepted when you contact the U.S. Postal Inspection Service. If you send cash through another mailing service, contact them and ask if they can intercept the package.
What To Do if a Loan Scammer Has Your Personal Information
Suppose you accidentally gave a scammer your personal information. In that case, you can prevent fraudulent activity by taking action as soon as you realize your predicament.
If You Gave Your SSN
Your Social Security Number (SSN) should always be secure because if a scammer gets ahold of it, you may become a victim of identity theft. If you give your SSN to an illegitimate loan company, report identity theft immediately to the Federal Trade Commission (FTC). It may also be a good idea to check each credit report and freeze credit altogether.
If You Gave Your Username And/or Password
If you gave your financial login information to a disreputable lender, change your password to prevent access. Luckily, many online websites have two-step verification processes. If you get locked out of your account, contact the financial institution to report fraud and unlock your account.
FAQs
When looking for a legitimate loan company, consider their licensing requirements, accreditations, Better Business Bureau (BBB) rating, online reviews, business tenure, and lending history. You can research a loan company by visiting their website, checking their BBB profile, reading customer reviews, and verifying their license with your state’s financial regulatory agency.
Yes, CreditNinja is a legitimate loan company because we are a licensed lender that complies with state and federal regulations, offers transparent loan terms with no hidden fees, provides clear contact information, has positive customer reviews, and we do not engage in predatory practices like guaranteed approval or upfront fees.
You can verify a loan company’s reputation by checking their BBB rating and reading customer reviews. To verify their licensing status and registration, you can check with your state’s financial regulatory agency or the National Multistate Licensing System & Registry. CreditNinja is licensed as a lender; you can check the agency above or directly contact CreditNinja’s customer support to request their licensing details.
A lender’s customer service can be a key indicator of its legitimacy. Legitimate lenders, like CreditNinja, provide accessible, professional, and transparent customer support to assist borrowers.
If you suspect a loan company is operating illegally, you can report them to your state’s Attorney General’s office, the Federal Trade Commission, and the Consumer Financial Protection Bureau. The Better Business Bureau (BBB) is a non-profit organization that collects and provides business reviews. They also mediate disputes between consumers and businesses; so if you encounter a personal loan scam, you could submit a complaint. As a legitimate lender, CreditNinja maintains a positive reputation with customer reviews and organizations like the Better Business Bureau.
How Can CreditNinja Help?
CreditNinja is a legitimate loan company because it is a licensed lender that complies with state and federal regulations, ensuring transparency and fairness with our lending process. Unlike predatory lenders, CreditNinja does not charge hidden fees, require upfront payments, or guarantee approval without proper evaluation.
We provide clear loan terms, flexible repayment options, and professional customer service, helping borrowers make informed financial decisions.
Additionally, CreditNinja has positive customer reviews and is recognized by the Better Business Bureau (BBB). When you need a personal loan, CreditNinja offers a safe, reliable, and transparent borrowing experience.
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