How to Protect Yourself From Cloned Loan Companies

Prevent yourself falling victim to a cloned loan company

It can sometimes feel that the internet is full of crooks and scammers. Not a day goes by when most of us receive a so-called phishing email, trying to tempt us to part with our money, or login details for bank accounts and subscription services. Most are fairly easy to spot but succeed by contacting vast numbers of people, a tiny percentage of whom respond. That’s usually enough to make the effort worthwhile for the scammers. Many scams are harder to spot, and the criminals are getting even smarter when it comes to their techniques.

One growing problem is that of so-called ‘clone-firms’. These use the name, Firm Registration Number (FRN) and addresses of a reputable company as a way to convince people that they are a genuine firm. Loan companies are particularly vulnerable to being cloned.

People looking for a payday loan are unfortunately falling victim to cloned loan companies. They set up sites that mirror legitimate lenders, and offer cheap, easy credit to people with a poor credit history, low credit score or very little savings in an attempt to try and extort money out of them. When you apply for a loan, you give the lender key information about yourself and your finances. You may pass on your bank details, and set up an account with a password you’ve used elsewhere. This gives the scammer a rich vein of information which they can use to commit ongoing fraud against you.

Consumers may sometimes be asked to pay a brokerage fee for arranging a loan. They may ask for a security deposit, or to make their first payment upfront. In some cases, borrowers have been asked to pay insurance premiums upfront in order to release the loan.

Scammers are smart, always evolving their techniques and are constantly trying to find ways to extract cash from their potential victims. It’s an incredibly serious problem and one that appears to be growing. What can you do to protect yourself from the crooks?

It’s important to be aware that these companies exist and to understand how they operate. The scammers rely on their potential victims being in the dark about their activities.

What Are Clone Firms?

Because they make use of a mixture of genuine and fake information, scam loan companies can be difficult to spot. According to the Financial Conduct Authority (FCA), cloned loan firms are fraudulent individuals or companies who are presenting themselves as an authorised, legal loan company. They use the registration number given to the legitimate firm by the FCA and attempt to extort money out of customers who think they can be trusted. They often use spam email phishing tactics or may try cold calling. They often make grand promises, offering completely unrealistic amounts of money, or a very quick service designed to tempt people who might be in the middle of a financial emergency. These offers really are too good to be true, but if you’re feeling a bit confused about what to do next, they can sometimes seem appealing, or at least worth trying out.

Cloned firms use the name of a reputable company as a way to convince people that they are a genuine firm

How Do Cloned Loan Companies Work?

To be legitimate, a loan company needs to be authorised by the FCA to promote, advise or sell financial products. Cloned loan companies claim to represent legitimate loan companies. They often go to great lengths to hide their real identity, sometimes even attempting to change the contact details for the legitimate company on the FCA register to try and appear legitimate. The fraudsters will then give their address, email and telephone details to potential victims. Sometimes the scammers will claim to be from an overseas company, as these don’t have their full contact details on the FCA register. Some will claim to be registered with overseas authorities, so their registration can’t easily be accessed.

Cloned loan companies sometimes create almost identikit websites, that look exactly like the website of the company whose identity they have stolen. All that will be changed is the contact details. The FCA report that they have also seen fraudulent copies of their website and their register of legitimate companies. Cloned loan companies can be difficult to close down because they often operate overseas, usually in countries that don’t have rigorous regulations. Cloned loan companies go to great lengths to try and get you to part with your money and bank details.

Payday Loan Companies Can Be Particularly Vulnerable to Being Cloned

Cloned company scams have their roots in the investment market, where new start-ups and smaller companies proliferate. As a sector with a high turnover of companies, it is easier for the scammers to take on the identity of companies. There are similarities with the payday loan market, where start-ups and new companies are regularly being opened, and others fall by the wayside.

Why Might a Scammer Be Interested in Me?

Cloned loan companies often target people who are having problems getting credit. If you have made several applications recently, then you may be at greater risk. Legitimate companies may well be targeting you with direct mail, and scam companies might be harder to spot. If you have been turned down for credit, you may be more susceptible to offers, even if you have some doubts about the company who is making the offer.

What Steps Can I Take to Avoid Getting Scammed?

You might be thinking that it’s impossible to believe that any payday loan company is entirely legitimate. There are lots of legitimate companies out there who are concerned about the impact the scammers are having on their industry. However, there are ways to check the legitimacy of a company and dramatically reduce your chances of getting scammed.

Legitimate lenders don't tend to contact people out of the blue

Don’t Trust Offers That Arrive Out of the Blue

Legitimate lenders don’t tend to contact people out of the blue, and many people who get caught out by loan companies have been contacted directly by the scammer. If this happens, either by email, text or phone call, it should set alarm bells ringing.

Ask If the Offer Sounds Too Good to Be True

There are lots of legitimate lenders who offer credit to people with a poor credit history, but there is no such thing as guaranteed credit. Extremely low-interest rates on short term loans should be treated with suspicion. As too should the offer of large sums. Most legitimate lenders cannot realistically offer large amounts in a short term payday loan.

Deals that appear too good be true are usually just that. Even if the offer sounds plausible, that doesn’t automatically mean that you’re not being scammed. The fraudsters are getting smarter, and are continually refining their approach. Some already realise that if what they’re offering sounds too good to be true, fewer people are likely to respond.

Look Out for Loan Fee Fraud

The most common way that cloned loan companies attempt to get money out of their victims is by demanding an upfront fee. Sometimes, the victim is persuaded to make several payments before the scammer disappears without a trace and the promised loan never arrives. Some of the warning signs of a loan fee fraud are:

* Being approached by a lender after having made several recent applications online to different lenders.
* You are being asked to make an upfront payment in an unusual way, such as through Western Union or by buying iTunes vouchers.
* You have been told that the fee is refundable, like a deposit.
* You don’t receive a notice from the company stating how the fee was calculated, along with other terms and conditions.
* You don’t receive a notice confirming the legal name of the lender and haven’t been invited to confirm receipt of such notice.

The most common way that cloned loan companies attempt to get money out of their victims is by demanding an upfront fee

Look Out for Common Tricks

There are common language tricks and approaches used by scammers to make people trust them. These include:

* Selective use of personal information about you which they may have gathered from various sources. This is used to make them appear more legitimate.
* They may well welcome your scepticism, and ease off for a while, especially if you express caution about the security risks.
* They frequently switch between a low-pressure, understanding approach, and a higher pressure more coercive approach. This is designed to unsettle you and put you off your guard.

Don’t Follow Links in Emails

If you are sent an email from a company offering a loan, it’s important to go directly to its website, and not to follow any links contained in the email. The same applies if they provide a link to a regulatory organisation like the FCA.

Check With the FCA

Your first step in checking the legitimacy of any company that you are considering dealing with is to check they are registered with the FCA. You can search their register for free. The register lists all the companies as well as currently and previously approved individuals that are involved with properly regulated financial activities. You can check the register to find out if they really are registered to offer loans. You should only use the contact details for a company that are listed on the register. If the details on the company website or correspondence don’t match up, that should act as a warning of potentially fraudulent activity. If you are still unsure, you can call the FCA consumer helpline on 0800 111 6768.

Check Other Records

There are other ways you can check the legitimacy of a company. One is by looking up what records are held about the company with companies house. They are required by law to keep records of all publicly traded companies in the UK. Directory enquiries can be a good place to start, as too can a Google search. There are lots of consumer forums available online where people share their experiences of dealing with a particular company. What are other customers saying about the company? Sometimes you will find people who have been taken in by the same scam or have done their own research about the company. This can be particularly helpful if you’ve received a spam email or a cold-call.

Check the Ranking Websites

Ranking websites are a great tool to help weed out the scammers. By checking the rankings for payday loan companies, you can find out who has a proven track record with customers and who does not. If the company who has contacted you has a poor ranking, it might not mean that they’re scammers but it might still be wise to seek out alternatives. If the company who has contacted you doesn’t appear in the rankings, that should prompt you to undertake extra research. As scam cloned companies steal the identity of legitimate companies, it still pays to make extra checks. A company with high rankings on consumer websites is likely to be more appealing to scammers than one that hasn’t.

Don’t Be Rushed

All of these checks take time, something that scammers are aware of. If they suspect you are doing background checks on them, they may attempt to cajole you into making a decision. They may suggest the offer is about to be withdrawn, and even point out that you’re likely to get credit elsewhere. Even if you’re in the middle of a financial emergency, the smartest thing you can do is take your time. Not only will it help protect you from the scammers, but it will also ensure that you find the best solution for your circumstances.

Use an FCA Authorised Credit Broker

To increase your chances of finding credit, of avoiding scams and ensuring you find the right solution for you, it can make sense to apply through an authorised credit broker. They are unlikely to approach you, instead, you can find legitimate, FCA authorised brokers online. They will only search through products from trusted, legitimate lenders. They will simplify the application process and reduce your need for multiple applications. They can increase your chances of securing the finance you need while protecting you from the scammers.

Scammers may well be getting smarter, but there’s no need to get caught out.