How to avoid landing in scam or fraud when taking a business loan

How to avoid landing in scam or fraud when taking a business loan

Digitization has arguably been both a boon and bane for people across the world, right? Boon for those who get to avail the benefits of it, and bane for those who get scammed through it by fraudsters. This has especially been the case of businessmen requiring Mudra loan or MSME loan for their business funding or working capital needs.

And with the pandemic harming every business and livelihood since the past couple of years, digitization has rapidly risen due to lockdowns and preference for no physical contact in society. That’s why there has simply been no stoppage in the immense and boundless rise of online cyber frauds and scams that have been hitting those who are in dire need of loans. They are the ones likely to get into the trap lured by scamsters on the pretext of lending.

All it takes is just one tiny instance of your carelessness can harm your finances and wipe out all savings.

Also, when it comes to taking an MSME loan, there are lots of scamsters waiting to disguise themselves as business loan lenders, and instead of lending you money, they grab all your money from your bank accounts. 

From your loan enquiries applications to disbursal promises, scamsters are following you and eyeing your money and financial details almost everywhere.

When taking an MSME loan, the scams and frauds during the loan can happen if you don’t pay attention, no matter how big or small the lender is or how cautious the customer and lender both were.

Hence, ensure to have knowledge about the commonly committed types of scams and cyber frauds taking place in the digital loan space so that when you apply for an MSME loan with lenders, you can be aware of what to do and what not to do.

Firstly, beware of false traps and fake information on social media

The craziness around social media platforms also involves a digital world full of fraudsters who find tons of ways to take away your money on the pretext of rather helping you get a loan.

When you are surfing through social media platforms, you may often come across various profiles or pages that claim to be the source of the loan by disguising as a lender. This is especially true not only for banks and NBFCs but even relatively new branches of lending, i.e. fintech. Many scamsters disguise themselves as new digital lender and trick you into believing that they are the authentic and original ones.

Ensure too, thus, not get fooled when they want your information on the pretext of giving you a loan. Visit the website of the bank or other lender, or download their app when in need of an MSME loan.

Next is to beware of phishing attempts. This in all likelihood is one of the widely-used and rather easy malpractices to steal your money on the excuse of giving you a lottery or lending you a pre-approved/ready to sanction a loan. 

In phishing attempts, you, the target, can mostly be tricked into either handing over or entering their sensitive personal information in order to steal money from your account.

Most common ways of phishing include sending unauthorized messages or emails, calls or even disguising themselves as trustworthy entities like government officers, bank employees etc., aiming to give you a Mudra loan.

So, make sure to avoid getting trapped in such phishing attempts by remaining extremely careful always and never ever clicking any random or unfamiliar link or giving your financial or personal/sensitive information to unknown sources no matter who they claim to be. 

Be 100% sure to visit the original website or app or even the branch of the lender when you need the MSME loan

Always do keep in mind that the majority of phishing attempts can easily be failed by you, the target customer, by not giving in to their demands and remaining cautious, hence preventing leakage of any of your personal or financial information that can land you into a fraud. 

And when thinking of taking a Mudra loan for your business, ensure you do not believe any XYZ app or website to be the original one and be very careful to scroll through all the big and small details mentioned on the website. Also, be cautious when downloading the app or getting the loan applied from reliable online finance portals, as a little mistake from your side can harm your financial health for the long term, too, hence also leaving a deep hole in your pocket.

Hence, it is best to not only be careful when using the latest technology or software but also ensure to only download authentic and verified apps when looking for a suitable lender to apply for an MSME loan.

And wait. Remember that other types of loan scams are no less dangerous.

Another way adopted by hackers is by sending you the notification of “request money” links, upon clicking which, whether out of curiosity or mistakenly, you end up authorizing the transaction unknowingly, and in no time, your bank account gets hacked and brought to zero!

As far as Mudra loan scam ways through OTP or UPI PIN etc. are concerned, it is done when the customer makes a transaction through the digital bank or another lender app, and during OTP authentication, the fraudster or scammer quietly slips in a timely message with a random otp which you may think as the expected OTP of the bank/another lender. Without paying much attention to where the OTP came from, you end up entering that pin without noticing. And that’s it. Scam completed.

That is why it’s advisable to not share any confidential details with anyone, no matter who they claim to be. Every day, every second, we all are unsafe in this digital world. And those needing a loan become soft targets due to dire need and financial weakness.

So, it is all about how carefully you act and ensure that you don’t share your personal and financial information with anyone or get tricked into some fake Mudra loan scheme through false promises or fake messages or schemes for any suspicious source acting or claiming to be a lender.

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Albert Wilson