Have you been called by someone claiming you have defaulted on a loan and will face criminal prosecution unless you immediately wire them the money? It is probably a scam.

Have you been called by someone claiming you have been pre-approved for a loan and all you have to do is send $150-300 for a processing fee? It is a scam.

How do loan scams work?

Like many financial industries, the loan industry has scammers that prey on desperate people. Most scams revolve around consumers unwittingly giving out sensitive information or sending money to unscrupulous individuals.

Upfront fee
A company posing a lender will guarantee you a loan if you pay an upfront fee first. The company may ask for the money to be sent as a wire transfer, money order, gift card or some other form that’ll be hard for you to get back once sent. After the company receives the upfront fee, they’ll disappear without giving you the loan they promised.

Loan collection
In one common loan scam, someone will call you claiming to be a debt collector. They may threaten you with legal action or arrest if you don’t pay. The caller may also have your personal details — your bank account number, for instance, or even your Social Security number. Having this information doesn’t mean the call is legitimate. More likely, it means that someone else sold your information to a third party.

Fake online form
In some scams, you’re asked to fill out an online form to receive a loan. After you’ve entered your bank account information, the operators of the website won’t actually extend a loan to you. Instead, they’ll enroll you into some type of membership program that will take money from your bank account.

If you are receiving communication or notices such as these please take proper precaution!

Tips to avoid becoming a victim of any scam:

• Ask the caller to provide their name, company name, address, phone number, and official documentation verifying the debt.
• Never give or confirm your Social Security number (or personal information of any kind) over the telephone or online unless you initiate the contact.
• Never send anyone funds to receive a pre-approved loan.
• Be suspicious of any e-mail with urgent requests for personal financial information. The e-mail may include upsetting or exciting but false statements to get you to react immediately.
• Avoid filling out forms in e-mail messages that request personal information.
• Ensure that your browser is up-to-date and security patches have been applied.
• Check your bank, credit, and debit card statements regularly to make sure that there are no unauthorized transactions. If anything looks suspicious, contact your bank and all card issuers.
• When you contact companies, use numbers provided on the back of cards or statements.
• Dispute any inaccuracies found within your credit report.