Customer Awareness: 6 Ways to Identify Credit Fraud – Suggestions from the Experts

Loan Frauds: The recent pandemic has been marked by an upsurge in various financial frauds. Loan fraud is one of the most common types of fraud that emerged during this era, when people needed instant funds to meet their medical or other needs. Digital and technological advancements have been a boon to the financial services industry, but they also present precarious challenges that can become almost difficult for a layperson to identify, let alone protect against such dangers. By abusing the beneficial use of digital technology, fraudsters can hide their true identities behind the anonymity of the World Wide Web to impersonate legitimate businesses and hack people’s accounts to commit financial fraud. The unprecedented COVID-19 pandemic, which caught everyone off guard, acted as an additional catalyst. Many people have become more vulnerable due to their lack of financial preparation to deal with the adverse situation. Fraudsters have taken advantage of this helpless situation to offer fraudulent loans in the form of easy and instant funds without any documentation.

Potential borrowers should be aware of loan scams and learn how to identify them to protect themselves from financial loss and mental hassle. Fakhari Sarjan, Chief Risk Officer, Bajaj Finance Limited, shares his knowledge to raise awareness and suggests 6 ways to identify loan fraud:-

Ways to spot loan scams

1. Ask for a refundable cash advance – “The prominent red flag of a loan fraud – if an entity offers you easy loans in return for an upfront fee in the name of refundable processing fees, GST fees, insurance fees, beforehand, stay away! No legitimate or authorized financial institution will ever ask you for an advance before granting you a loan. If there are processing fees, they will be adjusted in the loan amount before being credited to your account,” according to Fakhari Sarjan.

2. Create a sense of urgency- “A drip loan with pressure from the lender to act urgently is another indicator of personal loan fraud in India. Real lenders and real companies don’t make a time-limited offer and they give enough time to the individual to decide,” Sajan suggested.

3. Unknown company name – “It is imperative that people verify the identity of the company offering the loans through their official websites or by visiting their branches to ensure that they do not fall into fraud traps. Always do a thorough research on company credentials before sharing your confidential financial and personal information on any advertisement related to a loan offer that you may see on your Facebook page, YouTube page or even in your ads in local newspapers,” he added.

4. Unsolicited Communication- “Scammers are also sending text messages, emails, WhatsApp messages and making calls to people offering instant cash availability through zero percent loans. Such emails and messages can make you believe that you will get a secured loan without meeting any criteria. The fraudster is working on the motive of extracting your personal and financial information to siphon off your money. They may even disguise themselves as representatives of reputable financial institutions to trick you into their vicious schemes. But it is always best to remember that no authorized entity will call you or send you any unsolicited communication to collect your confidential financial and personal information under the guise of loan offers,” he added.

5. Secured Loan Approval- “You will want to steer clear of any loan advertisement that says ‘guaranteed loan approval.’ There is no guaranteed loan. Loan approval depends on several factors, including your credit history and verification of your information,” he advised.

“Furthermore, one should always be aware of the various steps to take, if they fall prey to such rampant loan scams –
1. Never panic or ignore such fraudulent scenarios
2. Keep your communication documented, to provide as supporting evidence when filing a complaint
3. Customers should never leave their mobile numbers/ID proofs/address proofs on social media platforms or websites as they can be misused
4. Report the problem to the bank or financial institution
5. File a complaint on the Cyber ​​Crime website at or call their 24×7 helpline 1930, which was previously 155260
6. You should even go to the nearest police station to file an FIR,” he suggested.

“Always, stay alert and aware of changing fraud trends and share your experiences and learnings with friends, family and society to help others too, stay on their toes when applying for a loan. In case of financial transaction, always deal only with reputable and legitimate financial institutions,” he concluded.

(Disclaimer: Opinions/suggestions/advice expressed here in this article are expert only.)

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