Loan frauds that you should be aware of

Loan frauds that you should be aware of

Digital transactions have surged exponentially in the past few years. But this revolution has also led to increasing cases of financial fraud. The first two years of the pandemic have seen the most cases of cyber financial fraud for two reasons: (i) the number of online transactions shot up dramatically and (ii) cybercriminals worked overtime to take advantage of the unprecedented situation imposed by COVID-19 and the not-so-digitally-savvy customers. Although the number of frauds registered and reported has started coming down with all regulatory and enforcement authorities taking up awareness initiatives, fraud continues with miscreants finding ingenious ways to exploit the vulnerable and gullible.

We may all have received an SMS or an email at some point in the past that sought us to click a link to avoid our credit/debit cards from getting blocked or to click on a link for enhancing credit limit to share an OTP for availing a loan or to click a link saying your loan is approved. While the awareness around cyber fraud is going up, so is the number of phishing, vishing and skimming emails, calls and text messages. Among these, loan frauds have also become rampant with the proliferation of fintech and digital lending businesses. Since prevention is better than cure, it is critical to be vigilant to avoid any potential fraud attempts. Here are some of the most common modus operandi used by fraudsters.

Phishing and vishing frauds
Miscreants often resort to phishing (fraudulent emails/texts) and vishing (fraudulent calls) posing as representatives of financial institutions or regulatory/enforcement agencies. They also share a few customer details, mostly general information such as name or date of birth, to gain the customer’s trust. Once they gain confidence, the imposters pressurize or trick the customers into sharing confidential details such as One-Time Password (OTP), PIN or passwords, card verification details such as expiry date or CVV, and others, giving various reasons. These reasons range from ‘to stop blocking your bank account/credit/debit card’ to ‘approve application’ or ‘to stop some unauthorized transaction’ or ‘to avail of an attractive offer/discount’. The imposter then uses the sensitive information (if provided by the customer) to defraud them.

Remember, financial institutions or enforcement/regulatory agencies don’t ask for any sensitive data. Never share any information with someone who calls you and never click any suspicious links sent via texts/emails by unknown senders to you. Your personal details are personal for a reason. Sometimes, miscreants also use names, logos, and other identity details of prominent institutions to dupe customers. In such cases, take a closer look at the email ID and domain name and for spelling errors to know if it has come from the official channels or not.

Fake loan website/app frauds

Fraudsters circulate fake advertisements on mainstream and social media channels to attract customers with loan offers that are too good to be true. They use tempting adjectives like ‘interest-free’, ‘instant approval’, and ‘limited offer discounts’ as pressure tactics so that they could trick the customers into doing what they want. When customers reach out to them, they ask the credit seeker to download unscrupulous loan apps via suspicious links. There also have been cases in which customers were shown fake apps which turn up on the internet as fraudsters created those applications to make the process seem authentic.  If customers proceed further, the fraudsters seek initial and upfront payment citing various charges such as processing fees, convenience fees or other taxes. Some miscreants also share fake company registration details. If you encounter any of the above, it is an attempt to cheat you.

No genuine and authentic digital lending app/agency seeks initial payments to process a loan. Never make any such payments or provide your signature/approval or share your credentials without verifying the authenticity of such products.

Loan OTP frauds

One-time Passwords (OTPs) were introduced as an extra layer of security to tackle financial fraud. In fact, they have become one of the strong pillars of modern-day financial services, enhancing the overall security of transactions. However, fraudsters have been resorting to various tactics to get customers to share OTPs to deceive borrowers. For instance, miscreants send SMS/email congratulating the customers that they are eligible for a credit limit or an enhancement of the existing credit limit. If the customer proceeds ahead, they inform them that they are generating an OTP to take the process forward. If you get any such requests from unidentified personnel in real life or on phone calls or emails, immediately stop the conversation as it is a potential attempt to hoodwink you. Also, keep an eye out for OTPs that land in your inbox. If any OTP comes to you without you generating it, stay vigilant.

The bottom line
Awareness and vigilance are two powerful tools to avoid being defrauded. Digital transactions such as payments and loans are to make your life convenient. Keep all your personal information safe and never share it with anyone. If at all you fall prey to any cyber attacks, immediately inform the financial institution concerned. Also, register a complaint with the cyber crime department by visiting

Reach out to your nearest police station in case of emergencies. In case you come across fraudulent apps, agencies and personnel, you can register a complaint with the Reserve Bank of India (RBI) by visiting or by writing an email to Always remember, if it is too good to be true, it may not be genuine.

Note: If you are looking for a digital loan from a credible and regulated player, check out ZestMoney by clicking here. We offer transparent, flexible and low-cost credit.