Watch out for scammers

FESTIVE SEASON: STRUGGLING AND UNSUSPECTING CONSUMERS TARGETED WITH FAKE LOANS

As the festive season approaches, scammers are rubbing their hands together at the thought of all the unsuspecting consumers they can scam, especially since they are struggling to make ends meet and would be eager to access credit to buy what they need and want.

But Ayanda Ndimande, strategic business development manager at Sanlam Credit Solutions, says it is time to tell these credit scams to scram. "As the festive spending ramps up, so do advance-fee loan scams and fraudsters who target consumers who might struggle to access a loan from verified lenders."

"They offer consumers fake loans that seem too good to be true. But what is an advance-fee loan scam?

"Scammers often promise large loans which do not require credit checks and send consumers offers for credit on e-mail or SMS notification or use flyers," says Ndimande.

"You could be asked to pay a small amount upfront, such as R1 000, which 'unlocks' access to up to R100 000 with a 4% interest rate. Once you pay, you never receive the loan."

She says the most significant warning sign is often the interest rate promised, especially if it is substantially below the prime rate, currently at 11.25%.

The prime rate is what banks typically offer to their most creditworthy clients and a verified lender would rarely, if ever, offer rates far below this.