Lending Scams – A Warning


Recently we have become aware of a number of finance scams that have really got traction. This one involves lending.

A potential client called looking for a truck loan of $35,000. They had been cold called by a lender advising they could assist. How they came to know he was in the market for a loan I could not say. The client (I will call him Mark), has a number of paid defaults on his credit file but this lender stated that was not a problem as long as he paid them a fee of $400. After paying this fee and waiting a week or so on and he still had not heard from this lender so he called. They said there were some problems and he would be required to make another payment of $2000! This became a bit of a cycle and Mark ended up paying a whopping $4000 before the lender just disappeared and he could not contact them. Mark did not get his loan and was left out of pocket.

Mark contacted ASIC and they began investigation and as far as we are aware the culprits were found but not before we were advised by 2 other clients they also had been called by a similar lending business.

Lenders and brokers generally do not cold call unless you have already got a relationship with them or have provided permission previously to be contact. Regardless if you are cold called by a company who wishes to lend you money or assist you with a loan do some homework. Here are some tips:

  1. Ask them for their ASIC accreditation number (Credit License Number – ACL, or Credit Representative Number – CRN). All finance providers and brokers are required by law to be registered with ASIC. Once you have their accreditation number check it is valid by calling ASIC or searching their website (www.asic.gov.au)
  2. Ask them for their ABN number. All businesses including sole traders have an ABN. You can then double check the ABN at abr.business.gov.au
  3. If you are asked for an upfront fee for a loan and do not receive a full declaration of why those fees are being sought then question it further. Do not just transfer funds blindly. For complex loans brokers may ask for an upfront fee to cover their costs, this is legal however the broker will provide you with a formal agreement between you and the broker so you know exactly what you are making a payment for. Lenders may do the same.
  4. If the lender or broker has a website they will have a detailed privacy policy, their ABN and their Credit Licence number listed. If they don’t then good rule of thumb is “walk away” as all lenders and brokers know the value in displaying this information for credibility verification.

Remember if it sounds to good to be true it is likely to be too good to be true. Lending scammers play a numbers game knowing there are people in our society that are more susceptible than other other to being scammed. It happens to people from all walks of life including educated people and successful savvy business people. These scammers know the psychology of how to convince and wangle their way in to your life and skin you alive.

If you think you have been approached by a loans scammer contact ASIC and ACCC. Also you can visit the Scam Watch website: www.scamwatch.gov.au. Also there are often discussions on Whirlpool that pertain to such scams from people who have been approached and scammed.