You’re a Victim of a Loan Scam. Now What?

Many of us have been there, or at least close to it. Loan scams are becoming riskier to businesses’ and individuals’ wallets, and scammers are increasingly clever in routing funds into their bank accounts. If you’ve fallen victim, it’s likely you’re feeling hopeless and embarrassed. However, quick action can minimize damages and help protect you and others in the future.

How does this start?

Scams can start in many different ways. For example, an individual may be searching for loans online. As part of the process, they’ll be provided an online loan application where the user will need to enter personal information, such as their name, phone number, email, and more private information such as Social Security Number, or other banking information. As part of this loan application form, scammers will use well-known branding such as bank logos, mission statements, phone numbers and addresses to closely resemble a financial institution. To receive the loan, the scam victim may pay an upfront fee to complete the loan, which goes directly to the scammer. In more serious scenarios – the scammer may have full access to the victim’s banking account. Scammers are also increasingly using peer-to-peer (P2P) applications such as Venmo or Paypal, making transactions much easier for the scammer, and much more difficult for the victim.

While there isn’t a surefire way to ward off scammers, there’s a simple rule to instill into your everyday life that may help. If you receive a call, text, or email and someone is asking for your financial information – never provide it. Repeat that 3 times. If you receive a call from someone claiming to be a representative from a financial institution or a large retail operation, you can always find their information online and call them directly. This advice can also easily cascade in the digital world. Instead of clicking on a link from your text messages or email, simply find their information online and explore from there.

Remember the “push” versus the “pull.” If information is pushed upon you, do your due diligence and “pull” that information yourself in alternative ways. While there are many tactics to help prevent scams, this is one important rule of thumb always to remember.

That said, what happens if you’re a victim? Always contact local authorities. However, below are some other steps to consider.

Step #1 – Stop all communications.

Once you’ve realized you’re being scammed, cut off all communication immediately and abruptly. There isn’t any reasoning with them.

Avoid threatening legal or criminal action, as that’ll likely make it worse. It’s tempting to be highly emotive in this situation, but remember to stay calm, cease any communication, and act swiftly to the next step.

Step #2 – Get secure.

If any information has been provided to a scammer, please consider these next actions.

1. Contact your bank and credit card companies and let them know what happened. They may be able to freeze your accounts and issue you new cards. This will help minimize damages.
2. Change all of your passwords across everything. Yes, it’s a pain. However, this is an incredibly important step that you’ll want to take. Also, please remember to follow best practices when creating a secure password.
3. Monitor your credit report periodically and diligently to detect if there’s anything deeper occurring, such as identity theft. Many credit report agencies such as TransUnion or Equifax will provide a free credit report to provide better transparency into this. Some  will provide free credit reports, but in order to get daily monitoring – it’s likely there will be a nominal charge.