How to avoid the scam in loans between individuals?

As a loan between individuals, many malicious people – scam – scammers, offer easy money through sites classified ads, on Facebook or with the use of websites giving the illusion of being serious lenders.

We conducted our investigation to understand the mechanisms and pitfalls.

What clues reveal these scams?

These multiple elements must arouse your distrust:

1. They are all willing to lend huge sums to anyone: up to millions of dollars! For a private loan by the usual way, the maximum is rarely more than 250’000 USD and the conditions of granting are strict, always depending on credit score and collateral.

2. Extremely low interest rate, from 2% to 5%, which is most of the time a lot better than any bank is offering.

3. Repayment period of 1 year up to 20 – 30 – 40 years. Some offer you to start repayment from the 6th month or so! Having a personal loan spread over more than 5 years is most unusual, and never from a true private lender.

4. They mainly target people who have been refused by banks, who are in financial difficulty and in distress. If you feel being a part of this list, be extra careful. It would be better even to avoid letting anyone know about all your difficulties.

5. Many times, they write English badly, with bad use of punctuation, bad grammar, use of archaic words and all that.

Sample scammer ad / posts / email

“Private lender, I offer loan of $1,000 to $2,000,000 to anyone able to repay it with interest at a low rate of 2% .We are individuals who offer loan between Serious Individuals who need for small businesses , personal investments for only 2% interest depending on the amount of money to give rate, and a delay ranging from 1 to 20 years. We make local loans and international loans to people all over the world. Our organization is not a bank and we do not need a lot of documents. Fair loan and honest and reliable. Contact me today and let me know how much money you want to lend.”

Most of the time the only contact details they give are a WhatsApp number and an email address (Hotmail or Gmail, usually).

How they present themselves

They present themselves as individuals full of generosity and money wanting to help the entire planet, even those who can never repay any penny.

Sometimes they try to gain your trust by pretending to be a third party who recommends a lender because they supposedly received the money as promised.

At least 1 in 3 cases, the lender is presented as a savior, as a “Man of God”. Also, way too many times, a scammer will start his false recommendation with words like “after I have been scammed so many times, I found Mr. …. who saved me from my despair”.

Scam on Facebook

The scam strategy on Facebook is to put forward credibility by:

  • Large number of members, friends, and photos (these are obviously fakes);
  • Lots of posts and likes.

But when you take a closer look, most of the times you will find a lot of strange things, such as:

  • The oldest post is older than the account; sometimes is even older that Facebook;
  • Most of the posts are in fact “X has changed his profile picture”;
  • Although the name is as American as possible, the Facebook account is a completely different story (Mr. John Americanos FB URL is www.facebook.com/akemoko.kehinde2563);
  • While you see a perfectly normal middle-age white guy taking a selfie with Donald Trump, all his friends are… different, usually from a West-African country.

Normally, is not that difficult to spot a fake account. Very rarely a scammer is that smart to avoid having his account disabled by Facebook, so most of them work on very new accounts. On a specialized Facebook group, at least half of the join requests are from Facebook accounts opened on that very day.

Also, many times they forget to keep some revealing info unbidden. Just yesterday I’ve seen a request to join a personal loan Facebook group from a perfectly respectable mid-west 7th generation American with Irish and German background. Ok, but how comes the languages spoken were English and Yoruba?

Our investigation with 3 scammers

How to avoid the scam in loans between individualsWe conducted our survey of 3 different hustlers.

I present myself as a normal person. Unemployed for 6 months, I have lawsuits, I have debts … the worst situations!

All three answers: WOW! … All agree to give me the loan while there is almost 100% chance that I will not refund anything! However, they are urgently asking me to send them the documents. One even agreed to lend me up to a million dollars!!!

One of the scammers has even laid down as conditions, I quote “Dispose of all his mental faculties”. For the sake of honesty, I informed him that I suffered from severe bipolar disorder and that I followed a heavy treatment, but he has accepted without hesitation, my state of health met the criteria!

In a previous survey of ours, we discovered something else: if you present yourself as doing well, especially with a good credit score, of at least 680, the chance of being victim of a loan scam attempt will decrease.

We are not saying that if your situation is bad, you are likely to be a sure victim. Don’t victimize yourself more than is needed. No, we’re saying that no matter how bad things go for you, stay on top at least mentally. Don’t give in, don’t give up.

Documents and Information required: danger!

They urge you to quickly send them a scanned copy of your ID and answer a questionnaire like this one:

LAST NAME: … … … … … … … … … … …;

FIRST NAME: … … … … … … … … … … .;

YOUR COMPLETE ADDRESS: … … … .;

POSTAL CODE: … … … … … … … … … ..;

STATE: … … … … … … … … … … … … ….;

CITY: … … … … … … … … … … … … …….;

SEX: … … … … … … … … … … … … ……..;

COUNTRY: … … … … … … … … … … … .;

OCCUPATION: … … … … … … … … … ..;

PURPOSE OF THE LOAN: … … … … …;

DATE OF BIRTH (yyyy-mm-dd): … … .;

CIVIL STATUS: … … … … … … … … … ..;

TELEPHONE / FAX: … … … … … … … .;

MONTHLY INCOME: … … … … … … …;

YOUR EMAIL: … … … … … … … … … …;

Name of your bank: … … … … … … … …;

Address of your bank: … … … … … … …;

ACCOUNT NUMBER: … … … … … … ..;

IBAN: … … … … … … … … … … … … …..

It is serious and dangerous to hand over all this information to unknown people! In fact, is quite risky even with people you know very well. There are very few institutions and companies who are entitled to handle that much personal information, which sometimes are not available in full even with a bank where you request a loan. Serious risk of identity theft, they know even where you live now…

The heart of the scam: fees to pay

Once all the documents have been sent, to receive the money, you will have to pay a fee. This fee they avoided to announce at the start of your dealings, but they always have an explanation: is not for them. These fees are for a notary, or a transferring bank processing costs. These fees are rarely big enough to feel an urge to use the baseball bat, but still, range from $50 to $300.

If you hesitate to pay these fees, they will put you in contact with the notary who will certify that these fees are legal. Or with a bank representative. In addition, you will be surprised to receive an email from a stranger who will guarantee that this person is absolutely “honest” by claiming that he or she received the money promised and that she was able to settle all their problems!

Once you have paid these fees, no pennies will obviously be paid into your account. Other fees will be required to unlock the money, until you understand that you have been ripped off! Then, radio silence, they disappear in nature…

Bottom-line: Credit Application = no fees to pay

In conclusion, when you apply for a loan, there is never a fee to pay in advance! Those who claim such fees are scammers!

Getting a private credit is difficult nowadays. Conditions have been tightening since 2003. Getting money as easily and on such favorable terms is a lie.

And finally, never give a copy of your ID or other sensitive information about your privacy to strangers. We know about personal data protection, but they don’t care!