Victoria, BC – BBB serving Vancouver Island is warning consumers to do some careful research in advance and to use extreme caution when applying for a loan online.
BBB was recently contacted by a consumer that claims to have lost nearly $7,000 to fraudsters pretending to offer online loans through a company using the name Business Fund Group. The fake loan company set up a website with a fake address in a popular local business centre in Oak Bay. The victim paid thousands in “fees” that were supposed to secure the loan, as well as cover legal and insurance fees. Once the fees were paid to the fraudsters the fake company removed their website, disconnected their phone and disappeared with the money, leaving the victim with no loan and in greater debt.
To protect yourself from fraudulent online lenders BBB has the following tips to consider:
- Carefully research the company first. Make sure the business is actually a legitimate, reputable online lender. Look up the company’s BBB Business Review. If the company does not have a BBB Business Review, consider why. Be aware that some companies that appear to be online lenders are actually companies acting as “lead generators” who collect your personal information and sell it to other lending companies.
- Locate the company. With the Internet it is very easy for a company to pretend to exist somewhere, when in fact they do not. Does the company provide a physical address, as well as a phone number and email address? Before applying for a loan online be sure to see if you can actually “find” the brick and mortar location of the company. Carefully review the contact information provided. Do a quick Google search to see if the address exists and the building in reference belongs to the online lenders. Consider independently contacting the landlord of the business building or property administrative office to ask if the company claiming to operate there is legitimate. If the address is for a mall or plaza consider contacting the owner of the mall or plaza to confirm the business resides there.
- Get it in writing. Be sure to get every detail of the loan agreement in writing and carefully read the fine print before signing anything. Be very suspicious if the company won’t provide you with a detailed copy of the loan agreement first. Carefully review the loan agreement to make sure it does not contain spelling errors or grammatical mistakes. Before signing the agreement, you may want to have your own lawyer, notary or financial advisor review it with you first. Don’t be fooled by documents that appear overly “legal” as well. You should understand all the terms and conditions of the loan agreement before signing.
- You should not have to pay a fee to get a loan. Legitimate financial lenders will not require you to pay a fee for paperwork, administration fees, legal fees or insurance prior to getting a loan. Typically, the cost of such fees is included in the total loan amount and is not an additional sum that you must pay up front in order to secure the loan.
- Never wire money. Legitimate financial lenders will never ask you to wire money to them for any reason. In fact, very few legitimate businesses will ever ask you to wire money to them. Scam artists like to use money-wiring services because once the money has been sent it is virtually untraceable.
- Use common sense. The reality is that if you are in a financially challenging situation, with significant debt and a poor credit rating, it is very unlikely that you will easily qualify for additional loans from any lender. Legitimate, reputable financial advisors can help you come up with a long term plan to repair your credit rating and reduce your debt, without charging you advance fees or additional fees for their services or advice.