Personal Loan Scams: How To Spot and Avoid Them

Personal loan scams occur when fraudsters pose as a fake loan company to get your money and personal information. Per the Federal Trade Commission FTC), people lost $2.95 billion to imposter scams in 2024, the second highest category of fraud by reported losses last year.

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These scams can be lucrative because it's normal for lenders to ask for sensitive information like your Social Security number and bank account information. Some of the red flags to watch out for:

• Unsolicited offers, usually via text, email or phone

• The promise of guaranteed approval

• Lack of a credit check

• Generous loan terms, including extremely low interest rates and high loan amounts

• No contact information, including a physical address

• Pressure to accept the offer

• Persistent communication, like spam texts or multiple daily calls

• Upfront fees or other hidden costs

• Odd payment requests via wire transfers or prepaid gift cards

"If it looks too good to be true, it is," said Joshua McKenty, CEO and co-founder of Polyguard, an anti-fraud technology company. "Legitimate lenders do due diligence; scammers rely on you not doing yours."

How Personal Loan Scams Work

Scam personal loan offers are usually unsolicited, meaning a fake company contacts you by phone, text, mail or email. They use "too-good-to-be-true" lingo and loan terms to hook a target. For instance, they may tout "guaranteed approval with no credit check" or offer exorbitant loan amounts with uber-low interest rates or long repayment periods.

These are some common scammer tactics in personal loan scams:

• They'll ask you to pay an upfront application, processing or an insurance fee for the loan.

• They'll use that information to deposit a fake check and ask you to repay its amount with gift cards, wire transfers, cryptocurrency or peer-to-peer payment apps to qualify for more funding.

• They'll direct you to call a 1-900 number that results in charges on your phone bill.

"If a lender is putting pressure on you to reply immediately or accept an offer because it will be gone shortly, then it's likely a scam," said Steve Azoury, Chartered Financial Consultant (ChFC) and owner of Azoury Financial in Troy, Michigan. "There are more people available to borrow money than money available, so legitimate lenders wouldn't use a high-pressure approach."

How To Check If a Loan Company Is Real

If you're suspicious of a lender, tap these simple steps to verify its authenticity.

Check If the Company Is a Registered Lender

They must register in a state to conduct business legally. Contact your state's attorney general (AG) or banking regulator to determine a company's registration status.

You can also look up a purported mortgage lender's Nationwide Multistate Licensing System & Registry (NMLS) number on the NMLS Consumer Access website.

Leverage Trusted Sources

While there isn't exactly a personal loan scammer list for reference, you can assess a company's reputation by tapping trusted consumer advocacy groups and review sites.

For instance, check if a purported lender is accredited by the Better Business Bureau (BBB) or if it has a history of complaints in the Consumer Financial Protection Bureau (CFPB) database.

Look for an Address and Contact Info

Reputable lenders are easy to find, so consider it a red flag if the company you're talking to can't provide any contact information.

"Ensure the lender provides a verifiable physical address - not just a P.O. Box - and use tools like Google Maps to confirm it," said Dave Meister, cyber security expert at Check Point Software. "Test their phone numbers and email addresses to make sure they work."

Search for Red Flags

Plug the company's name into a search engine alongside terms like "fraud" or "scam." If you find a website, scan for imposter tip-offs, like misspellings in the URL, poor design quality, and confusing subdomains.

"Research the firm," Azoury said. "Research the terms to ensure it makes sense. Research the cost to see if it's favorable. Don't let the temporary situation you are in cause a much bigger headache."

Real Lender vs. Scammer: Key Differences

What To Do If You've Been Scammed

These steps can mitigate losses and expedite recovery if you fall victim to a loan scammer.

1. Cease Communications

Stop answering phone calls or replying to texts, emails or lenders from the fake company. Be wary of new unsolicited communication from unfamiliar numbers or addresses.

2. Report the Scammer

The following steps protect not just you but other people who are similarly targeted:

• File a police report with the local authorities. You can also report the scam to the Federal Bureau of Investigation's (FBI) Internet Crime Complaint Center.

• Notify your state's AG or financial services department, as they'll investigate fraud patterns in your area. You can find your representative on the National Association of Attorneys General (NAAG) website.

• File an FTC complaint. You can do so using its online complaint website or by calling 1-877-FTC-HELP (382-4357).

• Contact your financial institution to report compromised banking information and replace debit or credit cards.

3. Seek Financial Assistance

Your bank might agree to cancel or reverse some fraudulent transactions. Credit and debit cards offer liability protections, and even certain wire transfers are reversible.

Alternatively, some insurance policies may cover fraud and expenses needed to recover your losses.

4. Freeze and Monitor Your Credit

Credit freezes prevent fraudsters from opening new loan accounts in your name — and are particularly important if you gave a scammer sensitive personal information. You can utilize one by contacting major credit bureaus Equifax, Experian and TransUnion.

The bureaus also offer identity theft monitoring for a fee. However, you can obtain free weekly credit reports at AnnualCreditReport.com, and your bank or credit card issuer may provide you with free access to your credit scores.

Safer Alternatives: Where to Find Real Loans

One of the best ways to avoid a loan scam is to seek financing from a reputable lender directly. Safe loan providers typically include:

• Banks or credit unions: Traditional financial institutions are subject to regulatory oversight and legal consumer protections. Start your search with these top credit unions for personal loans.

• Online lenders: These fully digital companies often offer competitive rates, but you'll want to verify their accreditation and reputation.

• Peer-to-peer lending platforms: These non-traditional marketplaces connect borrowers to willing lenders. They have their own pros and cons and also require careful vetting.

Keep in mind that personal loan scams differ from prequalified loan offers, which can come from legitimate financial institutions or marketplaces. You can verify a prequalified offer's authenticity by looking for loan fee disclosures, opt-out notices, privacy policies, and verifiable contact information. Learn more about the important loan terms to consider.

FAQs

How can I tell if a loan offer is fake?

Fake loan offers are typically characterized by terms that are simply too good to be true, including low interest rates, large amounts, and long repayment periods. Another hallmark of a fake loan offer is guaranteed approval without a credit check. It's also extremely common for scammers to be the ones who make first contact.

What are the most common loan scams today?

Common loan scams include advance fee scams in which a fraudster asks for an upfront processing, application, or insurance fee to provide financing. Loan scams also use a variant of the fake check scam in which the imposter deposits a fraudulent check into your bank account and asks for repayment via gift cards, wire transfers or cryptocurrency to build credit. You're then responsible for the payments once the fake check bounces.

Can a scammer get into my bank account with my personal info?

A scammer could access your bank account with personal information, though easy access depends on what specific information you've given them. If you think an account is compromised, it's best practice to notify your bank or card issuer and change passwords.

Can I get my money back after being scammed?

You can often get a bank to reverse or refund fraudulent charges to debit or credit cards. Legitimate wire transfer companies or peer-to-peer payment apps may also have consumer protection policies in place. Cryptocurrency and cash payments are much harder to recoup.

Do lenders ever ask for money upfront?

Legitimate lenders generally don't charge fees until they've disbursed funds — and any fees they do charge are often readily disclosed on their website or in your loan agreement. Consider it a major red flag if a lender asks for upfront fees or other hidden payments.

Sources

• FTC. 2024. "New FTC Data Show a Big Jump in Reported Losses to Fraud to $12.5 Billion in 2024."

• FTC "What To Know About Advance-Fee Loans."

• New York State Department of Financial Services (DFS). "Predatory Loans and Loan Scams."

• Better Business Bureau (BBB). 2025. "BBB Scam Alert: Receive a call from Jessica at a loan processing company? It could be a scam."

• Consumer Financial Protection Bureau (CFPB). "Consumer Complaint Database."

• BBB. "BBB Tip: How to identify a fake website."

• Office of the Attorney General - State of Tennessee. "You Think You've Been Scammed. Now What?"

• Georgia Attorney General's Consumer Protection Division. "Scams: What to Do if You’ve Lost Money in a Scam."

• FTC. "What To Do if You Were Scammed."

• Attorney General of Texas. "Cash Advance and Advance Fee Scams."