October 16, 2021

Identify Fraudulent or Illegal Loans

Have you been offered to borrow a lot of money “without conditions”, even though you have unpaid debts from a long time ago? Are you offered to solve all your financial problems in exchange for paying only a consultancy fee? Are you harassed by “promotions” in brochures, telephone or e-mail to deposit the money you need just by calling and answering some basic information? Beware! You could be facing a fraudulent lender, read on.

The risk of fraudulent lenders

Fraudulent lenders take advantage of the situation of people with financial urgencies, mainly in the following ways:

  • Deceptions that purposely lead to endless methods of payment and further indebtedness advantageous to them.
  • Using personal information of vulnerable “customers” for extortion crimes.
  • Stealing what little or a lot of money people have at the time, leaving them destitute and in debt.

However, the same institution points out that it is very difficult to register a formal complaint in these cases, since most of the time they are “ghost companies” that are not even registered and that Condusef cannot investigate.

How to know if the lender is legal or not?

Ask the supervisory institutions

All financial institutions that lend money must be included in the Registry of Financial Service Providers (SIPRES) or in the list of supervised institutions of the National Banking and Securities Commission (CNBV).

Tip: Click on the name of each institution and you can consult the registry yourself from the internet, free of charge. Have the name of the company or financial institution you are looking for at hand (preferably the full formal name, not abbreviations).

Compare several lenders

Platforms like ours provide a free and independent financial advisory service, which serves to compare your credit application between lending companies that have been previously endorsed by the relevant institutions. When comparing different online loans, check that your information is protected by the Federal Law for the Protection of Personal Data in Possession of Individuals.

Check social media and online reviews of the lender.

Whatever the reason you are asking for a loan, it is important that you do not succumb to desperation and take a few minutes beforehand to google a bit about the reputation of the company you will be applying to. Remember that checking the background of the company you approach is free, fast and mandatory if you want peace of mind.

Checking the background could be the difference between being a victim of a crime, or even saving a little more.

Red flags of an instant loan scam

You should be suspicious of a lender, company or financial institution offering you credit if you…

  • Does not ask you for any entry requirements or only your identification and personal information.
  • It does not check your credit history, does not ask for a guarantor or guarantee and yet offers you immediate loans from 20,000 pesos to 5 million pesos, to be paid back with fixed payments. Others even assure you that they will pay all your debts (without knowing the exact amount).
  • At the beginning, they charge you up to 6% of what you ask for a loan, for management expenses, fees, insurance costs or origination fees BEFORE you even know if you will be authorized or not, the credit.
  • They ask you for a first deposit to carry out any procedure, or they condition the service only if you provide photocopies of personal documents and credit and/or debit cards.
  • Prevents you from asking questions or responds to your doubts in a confusing manner. Remember that it is YOUR RESPONSIBILITY to investigate the company before hiring their service. If you do not do so, you will not have the elements to defend yourself in case you become a victim of fraud.

How to prevent fraud?

You must be the first to take care of your financial security. Keep in mind that it will be easier to cheat you if:

  • You leave personal information such as phone, mail or address on social networks.
  • You show desperation to get out of debt as easily and quickly as possible (we know what it means to have an economic emergency, but keep in mind that there are many fraudsters who are hunting vulnerable people), so it is best to expose your doubts in reliable financial sites, in calls or messages that you make directly.
  • You are not used to compare options. In addition to saving you from fraud, this could save you a lot of money in interest payments, if you manage to choose among several options the one that suits you best.

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