When people are desperate, they become vulnerable to fraudsters who are after their hard-earned money. Have you fallen victim to credit scammers? Do you know how to protect yourself when confronted by fake credit providers?
JustMoney approached experts to find out how you can spot a credit scam so that you can protect yourself.
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How do you identify a credit scam?
According to Carla Oberholzer, debt adviser at DebtSafe, you must pay attention to certain marketing descriptions. For instance, when you see words like: “Cost-effective loan in a short time frame”, “5% fixed interest rate, no credit review, from R20,000.00 to R10million, or a simple “Hi”, you must question the credibility of that credit provider.
“Remember: when a ‘credit deal’ sounds too good to be true, it usually is,” says Oberholzer.
Another warning, says Oberholzer, are credit providers that ask for an “upfront fee”.
“A registered creditor is not allowed to ask an ‘upfront fee’, sometimes referred to in adverts as an initiation fee or admin fee”, she says.
According to Oberholzer, these types of fees should form part of the monthly payment amount of the loan.
How to avoid credit scams
According to the National Credit Regulator (NCR), you can avoid being a victim of credit scams by doing the following:
- Treat all unexpected calls, emails and SMS messages with caution. Don’t assume they’re genuine, even if the person seems to know some basic information about you, such as your name.
- Look out for the name on all e-mails, in case it is a ‘clone company’ pretending to be a real credit provider. If you hover over the name of the sender you’ll see the actual sender of the message.
- Do not pay any upfront fees to release your loans. The National Credit Act does not allow credit providers to request upfront payments for the release of a loan. If the credit provider makes this request, do not engage further and report to the relevant authorities, such as the NCR or SAPS.
- Be aware of platforms used and hidden fees included for sourcing a loan.
- Don’t be pressured into acting quickly. A genuine credit provider won’t mind waiting if you want time to think and compare the costs of credit by using a quotation.
- Do not engage with credit providers who do not conduct affordability assessments. Furthermore, never give false or incorrect information on a credit application about your financial affairs. Always disclose your financial obligations and living expenses fully.
- Never borrow from an unregistered credit provider.
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If you have fallen for the scammers’ tricks, Oberholzer says you must notify the fraud division of your bank, the various registered credit bureaus, the Southern African Fraud Prevention Service (SAFPS) as well as the complaints department at the NCR.
“In some cases, you may need to go to your nearest Police station (SAPS) to get an affidavit and report the fraud,” says Oberholzer.
Oberholzer urges you to be careful and stay alert.
“Doublecheck that the credit provider does not fit the warning criteria above, make sure that you really need the credit that you want to apply for (like a loan), and protect your hard-earned money in the process,” says Oberholzer.
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