Loan scams

Fake loan offers

When borrowing money be aware of scammers offering fake loans. Be especially suspicious if you're asked to pay money upfront. Legitimate lenders will not ask you to do this.

Here we explain how to identify a fake loan and what to do if you've been scammed.

How to identify a loan scam

Scammers are skilled at convincing people that their loan offer is real. Here are some of the warning signs:

  • You receive a call or email telling you that you qualify for a loan from a company that claims to be a registered Australian company or Australian credit licensee. They may even have an Australian phone number or address to appear legitimate.
  • You're asked to make upfront payments before you get the loan, to pay for things like insurance, tax or initial repayments.
  • You're asked to deposit your upfront payment into an Australian or overseas bank account, a cryptocurrency wallet or a gift card for the scammer to redeem.
  • You're emailed from a generic email address, for example, a gmail, hotmail or outlook account, or an email address that looks like it's from a legitimate institution but is spelled incorrectly.
  • You're approved for a loan amount that is more than you require.
  • You're offered a low interest rate.

Case study: Peter loses $3,000 in a loan scam

man in his 50sPeter enquired online about getting a loan for $60,000 to buy a boat. He then received a call from a lender who gave him an Australian credit licence number.

The fake lender approved Peter for the loan and emailed him a loan contract. Peter signed the contract and emailed back copies of his identification documents.

Peter was then asked to transfer $3,000 into an Australian bank account to cover the insurance for the loan. Peter wasn't worried about doing this as the lender had sent him a seemingly legitimate invoice for the transaction.

After 2 weeks Peter started to get worried as he had not received the loan funds. He tried to call the lender but there was no answer to his calls or reply to his emails.

This case study is based on a true story. Read ASIC's media release about loan scams

Things to check before getting a loan

Do your own research. Don't rely only on the information the lender gives you.

Here are some checks you should do:

  • Check the company is real by calling their publicly listed phone number. Don't follow any links or use phone numbers included in emails - find this information separately. This is the most important check you should do as scammers impersonate licensed companies and will give you a real company's credit licence number to appear legitimate.
  • Check if the company's name is on ASIC's list of unlicensed companies. If they are, don't deal with them.
  • Check ASIC Connect's Professional Registers to see if they are licensed by ASIC. You can also phone ASIC on 1300 300 630 to do this check. 
  • Check ASIC Connect and search within 'organisation and business names' for their Australian Company Number (ACN).
  • If you are contacted by someone after submitting an online loan application, don't assume you know who you are dealing with. Scammers can hack legitmate websites of some smaller lenders to target consumers. 

Be wary of identity theft 

Be wary of giving out your personal details, including copies of identification documents like passport or drivers licence, or bank account details. Overseas scammers may use this information to steal your identity. Read more about identity fraud.

Check the company's publically listed number

Do not accept unsolicited offers of credit from unfamiliar lenders and only deal with reputable online institutions, after you have checked they are the real company by calling their public phone number. 

What to do if you have been scammed 

  1. Stop dealing with the person - do not respond to emails or phone calls
  2. Report the scam to ASIC
  3. File a police report at your local police station
  4. Warn your family and friends
  5. Put yourself on the Do not call register to reduce telemarketing calls
  6. If you have lost money and are in debt you may need financial counselling

If you have been scammed you will lose any money you have transferred, which could be thousands of dollars. If you have given the money to a fake lender, you won't be able to take your complaint to an external dispute resolution service as this service only handles complaints about licensed lenders.

Scammers are skilled at convincing people that the loan offer is real.  Be suspicious of anyone offering you easy money. There is almost always a catch.

Related links

Last updated: 18 May 2018