How Can You Avoid Coronavirus Loan Scams?

Coronavirus loan scam emails are hitting inboxes across the country. You may see messages promising instant cash relief with business or personal loans, but some of these enticing come-ons are scams.

Loan scams are one of the ways cybercriminals are persuading unassuming consumers to share their personal data.

“There is an increase in phishing scams and loan scams, including cybercriminals acting like they are a bank, the Social Security Administration or CDC,” says Henry Bagdasarian, founder and chief identity officer of the Identity Management Institute, a cybersecurity training and certification group.

Consumers and businesses should be on alert for loan scams and remain vigilant during the coronavirus pandemic.

Here’s what you need to know about spotting and avoiding loan scams related to COVID-19.

[Read: Best Small Business Loans.]

What Coronavirus Loan Scams Are Happening Now?

The Federal Communications Commission has warned consumers and businesses about coronavirus scams, typically phishing attempts by phone, email or text. Scams detected by the FCC include:

— A text from a phony FCC Financial Care Center offering $30,000 in COVID-19 relief

— Robocalls pitching student loan repayment plans

— Small businesses getting calls and emails about COVID-19 emergency funding and loans that are not official Small Business Administration communications

[Read: Best Debt Consolidation Loans.]

Why Are We Vulnerable to Coronavirus Loan Scams?

Using loan offers as bait, criminals capitalize on consumers’ fear and financial distress during the COVID-19 pandemic.

“Fear is elevating,” acknowledges Allen Spence, director of product leadership for identity monitoring service IDShield.

Not to mention, long wait times when people call banks or lenders drive people to use online tools instead, Spence adds. “This forces us to interact more electronically,” he says.

Also, stay-at-home orders and evolving remote work requirements can make people less cautious than usual. Says Bagdasarian: “People are preoccupied.”

Distracted by news, Zoom calls, and worries about health or homeschooling, someone might be more likely to open a damaging email attachment, click a bogus link or visit a fraudulent website.

“There are an increased number of fake websites going up to try to collect information, specifically for the SBA loan,” Bagdasarian says, referencing the SBA’s coronavirus rescue loan program that is now out of money.

[Read: Best Personal Loans.]

How Can You Avoid Coronavirus Loan Scams?

Avoiding scams means checking your gut. If a loan deal is so attractive that it seems like free money, there’s a catch — and you could pay a hefty price for taking the bait.

“If it sounds too good to be true, it probably is,” Spence says.

Also, the FBI warns the public about bad actors selling fake COVID-19 test kits and unapproved treatments to gain access to personal data. Ignore any such requests.

Here are some more tips to help you identify loan scams and to prevent cyberthieves from hijacking your sensitive information.

Beware of Loan Promos

If you receive an email from a financial institution offering a special loan, confirm that the offer came from the bank. And never click on a link embedded in an email offer — it will lead you to somewhere else on the web, where you could download malware or send personal information.

“Now, lenders are sensitive about not promoting financial instruments outside of products related to the stimulus,” Spence says.

Do not provide personal information in response to any promotional email, phone call or text message. Chances are, it didn’t come from your bank.

“You could think you are applying for a loan consolidation tool when it’s really a hacker,” Spence says.

If an offer from your bank hits your inbox and it piques your interest, visit the bank’s website rather than clicking on a link. As an extra measure, contact the bank directly to inquire about the offer.

Ask to Call Back

Robocalls are rampant. Fraudsters use this tool to cast a wide net to entice those who answer calls or return voicemails to give up personal information to qualify for COVID-19 relief loans.

Some criminals have already hacked into bits of your personal information and call you directly so they can fill in the gaps. Spence describes a call his wife received — allegedly from the bank where the couple does business.

“The weird thing was, the person on the other line never mentioned her name, and, second, he knew her bank account information,” he says. “He was very savvy and said, ‘I’m about to send you a link. Click on it, and I’ll send you a code so we can stop a fraudulent transaction.'”

The crook had his wife’s email and had changed her bank settings and account credentials. But wisely, she called the bank directly to report the suspicious inquiry.

The lesson: Never give personal information to a caller who asks for it. “If you get a call, say, ‘Can I hang up and call you back?'” Spence says.

Then verify your bank’s phone number so you can find out whether the loan offer is legitimate.

Go to the Source

If you want more information on the SBA disaster relief loan, then go directly to SBA.gov or call an SBA-approved lender.

Criminals looking to steal personal information might position themselves as SBA representatives, offering updates on loan status if you provide your Social Security number — or asking you to verify your bank routing and account numbers for a deposit.

Keep in mind, “Not just any lender processes SBA loans,” Bagdasarian says. Lenders that do are listed on the SBA website.

“There are scammers who pretend to be banks and say, ‘We have a great loan offer from the SBA, but you have to take advantage of it now, and you qualify,'” Bagdasarian says. “Then they ask you to fill out your personal information so they can ‘process your request as soon as possible.'”

If you receive an email or a phone call like this, stop. Call your trusted lender and verify the request.

Understand the Lender’s Typical Process

Learn about the loan you will apply for before sharing your personal information. “Find out the process for getting the loan,” Bagdasarian says.

— Should you expect a call from a customer service representative?

— Will the lender require you to create a login and password before applying online?

— What information will the lender gather from you to process the loan?

“If you know those mechanisms and you get a request through another mechanism, then you can identify that this is not the way the loan is being offered so you can prevent falling victim to scams,” Bagdasarian explains.

Monitor Your Credit

Whether or not you’ve received COVID-related loan calls, emails or texts, keep an eye on your credit to ensure your personal information is intact.

You should regularly monitor your credit report under normal circumstances, but it is even more important when the risk of scams increases.

Consider freezing your credit to limit access to your credit file and prevent unauthorized new accounts.

Change Logins and Passwords

Change your bank login and password if you’ve recently experienced a fraudulent attempt to obtain your personal information for a loan application. You’ll also want to do this if you accidentally click on a link to a fake website for a bank or the SBA.

“And, if you use the same login credentials for all of your online accounts, change them,” Spence advises.

More from U.S. News

Protect Your Credit During a Disaster

Can You Get a Small-Business Loan With No Credit Check?

Can You Skip a Loan Payment Because of the Coronavirus?

How Can You Avoid Coronavirus Loan Scams? originally appeared on usnews.com

Related Categories:

Latest News

More from WTOP

Log in to your WTOP account for notifications and alerts customized for you.

Sign up