Considering borrowing money to consolidate your credit card debt, make auto repairs, or pay your mortgage? Scammers use advance fee loans to promise you access to a loan, credit card, or credit line. If they can't get you those things, they say they'll connect you with a lender who almost certainly can. Regardless of your credit history. But first, you have to put down a down payment. In many cases, the scammer will claim it is a “processing fee,” an “insurance fee,” an “application fee,” etc. These are all lies. Neither a loan nor a lender exists. Paying the scammer will result in the scammer vanishing with your money.

Man lost more than a crore to an advance fee loan scam.

A 51-year-old man lost Rs 1.1 crore to two fraud finance companies after he needed a loan of Rs 2 crore to start his own pharma company. He was the Vice-President of a pharmaceutical firm based in Thane, at Wagle Estate. Chitalsar police station has registered an FIR against unknown people.

An advertisement from a finance company was found in a newspaper by the victim in July 2019. In his interview with the police, the victim has said, "I found the interest rate and installment payments easy, so I agreed to the loan," the company was named Paras Finance Loan Company. When I contacted them, they requested my documents, bank statements, and informed me that I was eligible for a loan of Rs 2 crore.

However, the executives of Paras Finance Loan Company began demanding money from the victim under the pretext of processing fees.

From July 2019 to October 2019, he paid Rs 14,13,047 as processing fees. His suspicion arose after they suddenly stopped communicating.

Having lost over Rs 14 lakh, he came across a commercial of a finance group named after an Indian cement and metal company. According to the victim, when he contacted them they initially asked for Rs 5,500 as registration fees. Then they sought Rs 1.2 lakh, then Rs 1.05 lakh, and finally Rs 54,500.

He was then robbed of Rs 12 lakh, Rs 8 lakh, Rs 6 lakh, and Rs 14 lakh under the pretext of formalities.

He was asked for Rs 17 lakh when he questioned them. However, he became suspicious. He eventually agreed to pay more than Rs 20 lakh as a final settlement after they convinced him. However, they took another Rs 7.50 lakh from him. In this way, the victim ended up owing Rs 87,51,100 to the second company. Despite this, after losing a total of Rs 1,01,64,147 to both, he filed an application with the Chitalsar police station to register an offense.

They verified all the claims and have filed an FIR against unknown people after receiving the application. These fraud companies had links to Delhi and Himachal Pradesh. 

What should you keep in mind if you want to borrow funds?

Those who have bad credit or have difficulty getting a loan are targeted by advance-fee scams. These scammers often post ads online or make phone calls with these so-called deals. There are many companies that purchase lists of names of people who search or apply for payday loans online.

The following information is important to know:

  • A reputable lender will not give you a loan or other credit without knowing your credit history but will demand that you first pay them. 
  • A real lender may require an application fee or appraisal fee before considering your loan application. 
  • There is no legitimate source that will tell you that paying a fee will guarantee you a loan.

Here are a few tips for staying safe while paying fee.

1. Using fake identification makes it easier for fraudsters to gain trust. Make sure you don’t fall for such attempts.

2. Check if the person is genuine before making any payment. A fraudster simply disappears once they have collected the payment.

3. Deals that appear too good to be true should never be accepted. In other words, any loan that is offered without any credit history check can most probably be a scam.

4. It is recommended that digital escrow platforms be used for payment. When making an online payment with Escrow, you do not share your financial information with anyone. There is a platform for escrow called Vouch.

How does digital escrow work?

In digital escrow, a third-party account holds the money deposited by the buyer until the seller fulfills the terms of the contract. The escrow company supervises the transacting parties.

What is the role of Digital Escrow in preventing online fraud in India? 

Digital escrow services are offered by many companies in India. Among the most trusted is Vouch.

Vouch’s Digital Escrow service is a transparent way for buyers and sellers to build trust and secure a clean transfer of product and payment. Sellers can feel assured that they will be fairly compensated promptly, and buyers will feel confident that their order will be delivered as expected and on schedule. Vouch Digital Escrow keeps you updated and informed at every step of the transaction process till the end. Vouch’s professionals are always available to assist you with all queries that you may have during the entire transaction process. 

There is no scope for deceit or fraud since the payments, shipping, delivery, and execution are carried out under the honest and watchful eyes of the Vouch’s professionals. With Vouch, any business transaction becomes transparent, uncomplicated, and hassle-free. If you ever come across a fraudster asking for OTP, asking you to scan a QR code, or asking you to click on phishing links, you can simply refuse and ask him/her to proceed with the transaction through Vouch.

This is Fraud Story #157. Check back here for more fraud stories and scams that you can protect yourself from.

Safety is not just about protecting your credit, debit card number, and UPI accounts. It's about having control of your money till you've received the product or service you bought online!

Note: This is a good-faith initiative to educate the world about avoiding frauds like these and how to act when you're becoming a victim of such a situation. 

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