This archive report was first published on 26 June 2020.
With the current economic challenges, many people are turning to loans to meet their financial needs. However, not all lenders are genuine, and some may be loan scammers who are out to defraud you of your hard-earned money.
According to Bett Kinyatti, a certified accountant with ACCA and a former financial auditor, loan scamming is a criminal offense under the laws of Kenya. In an interview, Kinyatti highlighted some common red flags to watch out for when dealing with loan lenders.
One of the most common tactics used by loan scammers is to ask for your ATM or M-Pesa PIN. They claim they need it to verify your personal and financial information with your bank or with Safaricom. However, this is a clear indication that they are out to defraud you.
Another red flag is when a lender asks for collateral that is not commensurate with the loan amount. For example, if you are borrowing Sh200,000, they may ask for a title deed or logbook as collateral. This is a clear indication that they are not genuine lenders.
Loan scammers may also operate from the streets of social media or the dark alleys of the World Wide Web. They may ask you to meet at a restaurant or coffee house to sign documents, but this is a clear indication that they are not legitimate lenders.
According to Kinyatti, another common tactic used by loan scammers is to ask for payment upfront. They may claim that this payment is to process your loan, to guarantee approval from the credit committee, or to show your commitment. However, this is a clear indication that they are out to defraud you.
Finally, loan scammers may send you poorly written correspondence, with grammatical errors and suspicious email addresses. They may also prefer to chat through social media direct messaging, from a suspicious dormant account.
So, what can you do if you've been scammed? According to Kinyatti, you should lodge a complaint with the relevant authorities, such as the DCI department that handles financial defrauding. Regulated financiers will not buy off the loan you took with a scammer.
