Watch Out For Credit Scams This Festive Season

As the festive season approaches, scammers are increasing their efforts to take advantage of consumers who are struggling financially and eager to access credit. Ayanda Ndimande, Strategic Business Development Manager at Sanlam Credit Solutions, warns that advance-fee loan scams are particularly common during this time. These scams often target individuals who may have difficulty securing loans from legitimate lenders.

In an advance-fee loan scam, fraudsters promise large loans with no credit checks, often via emails, SMS notifications, or flyers. They may ask for an upfront fee, such as R1,000, claiming it will unlock access to loans of up to R100,000 at an unusually low 4 interest rate. However, once the fee is paid, the loan never materializes.

One of the most significant red flags is the interest rate. If the rate is much lower than the current prime rate of 11.25, this is likely a scam. Legitimate lenders rarely offer rates that deviate significantly from the prime rate, so anything below 5 should immediately raise suspicion.

• Lack of personalization: Scammers often send generic messages such as "Dear client" rather than addressing you by name.
• Unprofessional branding: Be cautious if the branding looks off - watch for inconsistent fonts, colors, or poor design.
• Spelling and grammatical errors: Legitimate companies take care with language, so mistakes in emails or messages are a warning sign.
• Suspicious contact details: Fraudsters might use a personal phone number or generic email service like Gmail rather than a professional business email.
• Lack of authority information: Verify that the lender is registered with the Financial Sector Conduct Authority FSCA and is a legitimate financial services provider.

To keep your personal details safe from fraudsters:

• Use strong, unique passwords and avoid storing them in one place.
• Delete banking notifications and SMSs immediately to avoid them being accessed if your phone is stolen.
• Hide your banking apps on your phone to make them less accessible.
• Shred or burn physical documents once they're no longer needed.
• Regularly monitor your credit report for unusual activity to spot any potential identity theft.

If you suspect youve been scammed:

• Never respond to one-time PINs OTPs unless you're conducting a transaction.
• Monitor your bank statements for suspicious activity and check your credit score frequently.
• If you notice any irregularities, immediately contact your bank to block further transactions and report the issue.
• File a police report and obtain a case number for further investigation.

By staying vigilant, checking for red flags, and regularly monitoring your financial activities, you can reduce the risk of falling victim to credit scams during the festive season.