Recent statistics show that one of the easiest ways to become a target for both identity fraud and collection scams is to apply for a bad credit online loan.
Experts warn that once consumers have submitted an application for a bad credit online loan, their personal details can easily be used or sold by anyone in the world. In light of the report, consumers are being advised on the best ways to protect their identities and avoid online loan scams.
Every year hundreds of consumers are harassed by bogus debt collectors for debts that they do not owe. Many of these consumers have ended up paying thousands of dollars to online loan scams in order to get help which they do not actually need. When this happens, it is usually because the personal information has been compromised when they applied for an emergency loan, a small business loan or a pay day advance online loan.
These online scams prey on those who have been turned down for a loan. They offer promises of approving loans even to those who have bad credit. However, those consumers who are taken in by the scam end up having their personal information sold to companies all over the world. These websites are also commonly set up to mask an “advance fee” loan provider.
This means that on being approved for the loan consumers are told that as security they need to make several months payments in advance before the loan can be released. This is a lose–lose situation.
Of course, not all online loans are scams so it is important to know which websites you can trust. There is no sense in telling consumers never to apply online for a loan, instead it is useful to educate consumers in what they should be looking out for. The first thing to check out is whether or not the site is secure. All good loan providers should have a security certificate from Verisign or a similar company.
Consumers can also look into the loan provider by visiting a search engine and searching the company name + complaints. This will give an overview of the company. A few complaints here and there is to be expected for any company, but if you come across many complaints then it is a definite red flag. Lastly, never pay any money upfront for a loan. You should not have to make a security deposit or an application fee when applying for a loan.