The Covid-19 pandemic did not only affect people health-wise, but it also affected them job-wise and business-wise. People lost their jobs and business owners faced financial setbacks.
With that effect of the pandemic, there was an increased demand for financial help to make ends meet.
Fintech companies through lending apps have, pre-Covid, been filling the void between traditional MFBs and the underbanked by providing services and instant loan access.
Post-Covid, these financial institutions have taken advantage of the financial circumstances of these consumers by developing more lending apps in a bid to meet the financial needs of the ever-increasing loan seekers.
While this is a welcome development as it seeks to lessen the financial burdens of people who may need loan(s) to solve their financial needs, the concern, however, is that fraudsters may take advantage of lenders by offering them payday loans in-app, all in a bid to swindle them.
These scam lending apps appear so genuine — with many of them showing over a million app downloads and reviews — and they offer mouth-watering interests with little or no verification process before users can access loans.
The most shocking of the sham that is some of these lending apps is that they have no form of licenses except an MOU they signed with a Micro Finance Bank to use their platform as channels to transact.
While this may be legitimate, it does not protect the user from being scammed because these lending apps may decide to “close shop”, thereby leaving you stranded.
That is why we will be highlighting signs you should look out for so that you do not fall prey to fraudulent lending apps.
No physical address
In the history of red flags, this is the first when it comes to spotting fraudulent lending apps.
You might say “It doesn’t matter since it’s an app” but the fact remains that, having a verifiable physical address ensures that the lending institution can be traced when things go south.
If they do not have an authentic physical address, abort the mission! Fraudulent loan providers would rather stay under the radar to evade the legal consequences of their shady activities.
Some are not even licensed and do not have websites, thereby making their verification impossible.
No payment history verification
You will agree with me that one thing lenders do not joke with is the credit history of an intending loan applicant.
This is one of the ways lenders ensure that, in addition to the loan applicant having good financial records with financial institutions, they are also capable of repaying the loan — an indication that they won’t default when its time to repay.
So, if they do not verify your credit history prior to approving your loan, you might want to reconsider.
Fraudulent lending apps tend to seek high-risk debtors who are likely not to investigate their apps because of their desperation to access loans.
Opaque information
Fraudulent lending apps do not share comprehensive details of their credit report fees, apps and appraisals.
This is their modus operandi and it is a clear indication for you to avoid them.
Constant pressure to apply for loan
Fraudulent lending apps always hound people to apply for loans. You get calls from them giving you a deadline, claiming your loan limit has been increased or promising discounts when you apply.
No matter how urgent they sound, do not be moved.
Unsecured website
Genuine lenders will ensure your data is secure and as such, won’t expose your information.
So, when you visit the website of a lender and you do not see the padlock symbol on the page where you are asked to share your personal information, flee!
Bottom line
Inasmuch as there are fraudulent lending apps, there are still genuine ones. Its left for you to investigate properly before choosing which to use.
Here are simple steps you could take on your own to verify their authenticity:
- Check for online reviews (not only on Google Play Store or Apple Store but also on review websites
- Ensure they are licensed to operate
- Search for their contact information online
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