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Loan repayment fraud

Many small and medium-sized organisations affected by a coronavirus faced trading difficulties and risks of becoming insolvent. The government offered such firms low rate loans. There are various application rules and specific conditions to handle firms that could not recover from that position where they could be placed in a formal insolvency process. 

But some firms used dormant companies to get cash at a lower rate, and some customers used the money as deposits for buying cars. 

Additionally, multiple cases of loan repayment scamswere reported. It happens when a tracker uses the company's name that resembles the loan firm, and they send a letter claiming the recipient has missed a repayment and then charge a penalty for the delay. 

The victim transfers the funds into the scammers' account to discover later they own the full amount. 

Finally, there are some hard frauds where a person indulges in deliberate deceits like an impersonation of legitimate firms or individuals or using money mules to get loans, who then file for bankruptcy. Since there were many such reports, the lenders were asked to scrutinise money laundering and conduct KYC checks.  

How To Protect Yourself?

  • Check the original paperwork if you have been contacted by someone who claims to be from the loan office and asks to pay the penalty for delay in the payment of instalments. 

  • Contact the lender and get details/statements of all the previous payments and transactions from your bank account. 

  • Ask the person who calls or sends a message to explain it in detail to find out from where they got all the information. Do not take action in a hurry, and do not panic.

  • If money has been lost or you suspect fraud, it should be reported to the authorities.

Date Published: Feb 16, 2022

Types of fraud

A-Z of fraud

To help understand which fraud you've been affected by, we've categorised them into an alphabetical list.

What is fraud and cyber crime?

Cybercrimes can be of two types. First, it can be cyber dependent, where the fraudsters use online devices to convince the victim to accept their offers.

Advance fee fraud

If you are trying to get a loan for a house or a car, they ask to meet the provider to get the financing arrangement and pay the finder's fee in advance.

Corporate fraud

Corporate frauds can be complicated, committed either by the firm or an individual. Nevertheless, it mostly involves cheating where the employee or the firm.

Individual fraud

There are many types of individual frauds related to advance fees, investments, insurance brokers, bogus tradespeople, Ponzi schemes, pension liberation.

Online fraud

Hence the number of cases of online fraud is increasing each year, and most such cases include – account takeover, direct frauds, or scams related domain names.

Identity fraud and identity theft

The criminal uses the stolen identity of another person living or deceased to conduct unlawful activities like obtaining goods or services in another's name.
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