Don’t get trapped by these common banking mistakes.

Avoid Loan Scams - cannect talks

Desperate financial times call for tightening our belts, budgeting, and buying things on sale. But for opportunistic scammers, lean times mean the playing field is ripe for taking advantage of the less fortunate.

The Payday Loan Promise

Payday loans work on a tantalizing promise: we’ll loan you money until your payday comes, but we’ll charge you high interest rates for the “privilege”. Since many of them work outside the law, they can practically promise you the moon. They also prey on your situation, adding pressure, asking for personal details, and purposefully keeping information unusually secretive.

Of course, not all payday lenders operate this way, and some are easily identifiable as scams. But others throw up several red flags that can be easy to miss unless you know what to look for. Let’s take a look at what you should be watching out for.

You’re Pre-Approved!

Loan scams will often entice you with an email (or a letter) that tells you you’re pre-approved for a loanexcept you never applied for one in the first place. This kind of offer—particularly if sent through an email—is often used to steal your identity as well as your financial details.

There’s an Extra Cost to Receive Your Loan Funds

One of the biggest warning signs of a loan scam is the lender forcing you to pay a fee up-front to get access to your loan funds. If the lender asks you to do this, cancel the transaction immediately.

All You Need is a Bank AccountNo Credit Check!

It sounds too good to be trueespecially if you have bad credit. Here’s a lender that’s willing to help you out, and all you need to give them is your bank account information, there’s no credit check!

Don’t do it. Credit checks aren’t always necessary for payday loans, but other information may be required. Don’t trust a supposed lender who only wants your bank account information, as they could be poised to empty it, leaving you in a worse financial situation than when you started.

The Lender Does Business Entirely Online and There’s No Brick-and-Mortar Location

The internet has truly revolutionized the way we do business, including our day-to-day financial business, but reputable lenders understand that having an actual business location and doing business face-to-face adds to their credibility.

Beware of lenders who don’t have a physical location or who refuse to give you an address. They may be in another country entirely, and are looking to get your financial details, then vanish.

Don’t Call Us, We’ll Call You

In addition to not having a physical location, loan scammers will often not give you their contact details or phone number. Instead, they’ll insist that they call you when the money has been transferred (or some other nonsense).

Reputable lenders want you to feel comfortable with the process and understand it fully, so they’re more likely to provide you with multiple convenient ways to contact them.

Respond to a Different Email Address

If a lender sends you an email from one address but asks you to respond to a different one, it may indicate that the original email address has been hacked or “spoofed” to look like it came from a trustworthy source. Email addresses can easily be changed to mimic those of well-known financial institutions, so if you’re asked to respond to a different email address, it’s likely a red flag indicating a loan scam.

Before You Proceed, Research

Coomon bank loan scammers 
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You may feel the financial pinch and be under considerable pressure to get a loan quickly in order to pay for necessities like your mortgage or utilities. But taking a little time now to do some up front research before applying for a loan can save you a lot of trouble and frustration later.

Here’s what to do:

Do a Search with the Lender’s Name and the Words “Scam” or “Complaint”

A simple Google search will turn up quite a bit about a prospective lender if you know what to look for.  

You can start by typing the name of the lending company in the search box followed by the words “scam” or “complaint”. This will pull up any search results where customers have had poor dealings with the company. And when it comes to loan scams, the more informed you are, the better you can avoid costly surprises.

What if a Search Returns Nothing?

It’s possible that your search turns up no results, or very few. In these cases, no matter how good the deal sounds, it’s best that you work with a more established, registered lender than someone offering loans with rates that sound too good to be true.

If you want to dig a little deeper, you can look to connect with past customers through testimonials found on Google or elsewhere and look to Ontario Ministry of Government and Consumer Services to determine if the loan company is licensed or if they have any complaints or strikes against them.

What You Can Glean from the Lender’s Website

Even fly-by-night loan scams can have beautiful, professional-looking websites, so you cannot judge a possible loan scam by the look of their website alone.

What you can do, however, is learn a bit more about the owner of the website. Services like allow you to type in a domain name and see more about the owner. Is it a legitimate company, or is it an unusual name in a different country?

Domain name ownership can also be hidden or set to private, making this yet another possible red flag. If they don’t want you to know who they are, why should you trust them with your personal or financial details?

Location, Location, Location

In addition to doing a Google search on the company name, you can also use a map application or service like Google Maps. If they’ve given you an address, search for it and then click the Street View option. Does it look like a vacant building or someone’s house? If so, there’s a very real possibility that it’s a loan scam.

Go With Your Gut

These are just a few of the many ways loan scammers operate. Cyber-criminals, identity thieves and other disreputable individuals are always coming up with new methods and ploys designed to separate you from your money as quickly as possible.

If something doesn’t feel right to you, or if something seems off, go with your gut and avoid seeking a loan from the company altogether. Cancel the transaction and avoid replying to any emails or calls. It’s a far better idea to go with a lending institution that you know and trustone where your business is valued and where you feel comfortable sharing your personal information.

If you believe you are the victim of a scam, contact your local police department right away and report it to the Canadian Anti-Fraud Centre.

The Payday Alternative

Even in lean financial times, if you can avoid getting a payday loan, you should, since it may cost you far more than you thought. We set up Cannect as a safer, more flexible financing alternative so that even the most urgent money needs can be met without piling on the debt.

Check for yourself in just 3 easy steps with our free online quoter, and then contact us directly to receive your money in as little as 24 hours.

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