In today’s modern world, there is cutthroat competition everywhere. Wherever you can see, you will only find competitiveness. One of the classic examples of this spirit is modern-day lending.
Most lenders are now competing to get a significant share of the borrowers. A lot of hard work goes into attracting more customers. Due to this, lenders have eliminated the tedious loan application processes.
Primarily, this is done to offer ease and comfort to the borrowers. If you are willing to avail of a loan, you require very less information for that funding. Further, the process barely requires any time.
How does fraud happen?
Most lenders just look at your preliminary information and release the loan amount. Regardless of your background, you are eligible for the lending. Compared to the past, this has increased nowadays.
The sole reason behind this is the excessive supply. But at the same time, there is a rise in fraudulent activities.
Several identity fraudsters have now taken this route to fund their illegal activities. These types of fraud are more prevalent among people when they find different deals on personal loans, payday loans or bad credit loans in Ireland.
Without much verification, the lender may offer a loan. Even without a credit score, fraudsters can obtain a business or personal loan. It is the prerogative of every lender to discourage such activities and fraud is happening around. What can be done from the lender’s side? Every lender must follow a fraud detection system. If someone else is the authorized one, they can form their strategy.
For example, the first step may involve the identity verification of the borrower. Once the borrower passes through this phase, the next step should consist of credit score verification.
The third and last step must include the repayment capacity check. All these three steps combined form a simple verification procedure. Most of the reputed lenders follow this procedure and have mitigated the default risk for them.
Different kinds of fraud
Frauds are becoming common with increasing awareness and availability of borrowing. Some of the prevalent frauds in the ecosystem are described below:
- Application Fraud
The most common type of fraud is the application. Since it’s the primary step, the fraud begins here. Many people provide misleading information and create a deceptive form.
Borrowers try to con the lenders in several ways. It can either be stolen information or fake information.
This especially happens in the case of unsecured loans. Since there are no assets or mortgages involved, the chance of a scam is higher. These frauds in unsecured personal loans are quite prevalent in Ireland.
Some of the common examples of application fraud are
- Identity Theft
Identity theft is a common form of fraud. In most cases, the person whose information is being stolen is unaware of it being stolen. Till the time a strict process is not put into place, the official documents can be forged and stolen.
Despite several parameters, the scamster can easily find out a way to steal the information and fulfil their goal of securing a loan.
- Fake Bank Account
The next is the fake bank account. In such cases, the only authority at a loss is the lender. Identity is not forged in this case. The fraudster creates a fake identity that is not a copy of a real person. It is wholly made of an identity that involves no real people. There are several places where you can go to create fake documents.
A black market runs parallel to the regular market. The person can set up a fake bank account by getting illegal and duplicated documents. Once the lender is trapped in this scam, the loans in Ireland are given to the fake borrower. Post this transaction, the fraudster empties the account and runs away with the money.
- Fake Information
Fake information is like identity theft but is not the same. The fraudster deceives the lender by misrepresenting their assets or income.
For example, if the borrower earns £2000 a month. They may create a misrepresentation and show up to £4000 a month. This can be attractive for the lender, and they can be trapped in this. These types of fraud are generally common. Wherein there is a co-conspirator.
2. Information Fraud
Personal information is a crucial step for verification. If the information is forged or breached, it can cause a problem for the victim. In such cases, the fraudster compromises the information of the victim to gain access to the bank accounts.
They try to go on the lending institutions. Various tools used to do these frauds are
- Web Scraping
Web scraping is a common feature. There are certain websites wherein people register themselves by putting in their personal information.
The fraudsters keep an eye on such platforms and gather information. Whosoever is an easy target falls prey to them.
- Account Hacking
Hacking is a common form that we hear of on a day-to-day basis. But what is the extent of hacking? Some people hack other person’s bank accounts and loan accounts. This serious offence is punishable under the law.
It is essential to keep your accounts hack-proof. Also, do not share your passwords and information to stay safe.
- Loan Phishing
Phishing is one of the consequences of digitalization. Fraudsters keep on sending emails to different people. Some ignore while some may read it. With little vigilance, you can easily put a stop to such things and safeguard yourself.
- Dark Web
The dark web is something that people just hear of. Although it may be fascinating, it should never be taken lightly. Several thefts are happening on the dark web these days.
Lending fraud is the most common one. Since it involves huge amounts of money, it is attractive for fraudsters to hack accounts and misuse the information.
These days, financial fraud has become regular practice in the market. Some people may be a victim of huge amounts while others are struggling with the smaller ones. You must safeguard yourself from such things.
People usually avail of unsecured loans to simplify their finances. But fraudsters have a different aim. Hence, lenders are careful to whom they lend their money. Once the transaction is done, it cannot be reversed or undone.