Too good to be true: How to spot personal loan scams

Core Insights - The article discusses the increasing popularity of personal loans in the U.S., highlighting a significant rise in outstanding personal loans and a concurrent increase in fraud cases related to these loans [2]. Group 1: Personal Loan Popularity - As of the end of 2024, Americans owed $253 billion in outstanding personal loans, marking a 42% increase from 2022 [2]. - The convenience of personal loans has contributed to their popularity, allowing quick access to unsecured funds for various needs [1][2]. Group 2: Rise in Fraud - Consumers lost $12.5 billion to fraud in 2024, which is a 25% increase from the previous year [2]. - The unsecured nature of personal loans makes them attractive to scammers, as they can process applications quickly without collateral [4]. Group 3: Scamming Techniques - Scammers often create convincing fake websites to impersonate legitimate lenders, exploiting borrowers' urgency in financial situations [5][6]. - Advance-fee scams are prevalent, where scammers require upfront payments with no intention of providing a loan [7]. Group 4: Red Flags for Borrowers - Key red flags include upfront fees with guaranteed approval, unusually low rates, lack of transparency in contact information, absence of licensing information, poor or no reviews, unusual payment methods, and high-pressure sales tactics [9][10][11][12][13][14][16][18][20]. - Legitimate lenders typically charge origination fees deducted from the loan amount, while scammers may request payments through unconventional methods like cryptocurrency or gift cards [19]. Group 5: Recommendations for Victims - If a victim of a loan scam, individuals should file a police report, notify their bank or credit union, freeze their credit, report the fraud to the FTC, and regularly review their credit reports for unauthorized accounts [21][23].