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“Let’s talk about money”: payment difficulties – beware of loan fraud

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In the latest edition of its consumer information series “Let’s talk about money” the Austrian Financial Market Authority (FMA) informs about escape routes when in payment difficulties and in particular also warns about becoming the victims of loan fraud.

Loan fraudsters want to earn from human suffering and offer loans with apparently low interest rates – that are for example advertised as “rapid loans” or “restructuring of debt without credit checks”. The scams work in that the applications for loans are seemingly approved quickly, but that the borrower is instructed to make one or more advance payments before they actually receive money. There is never any intention to actually pay out the loan amount, and those affected, in addition to their existing payment difficulties also lose a lot of money in addition.

Particular caution is urged in the case of the following warning signals: offers of loans are often sent as unsolicited e-mails; loan applications are approved promptly, and hardly any information is collected about the borrower; borrowers do not receive written contracts, T&Cs etc.; borrowers are instructed to make advance payments; borrowers are placed under pressure.

The FMA advises anyone who is affected and unable to pay their bills to seek help promptly – by arranging a meeting with their bank as well as to make use of a debt counselling service – which is confidential and free of charge in Austria. Victims of loan fraud should in any case report the incident to the police as well as contacting consumer protection groups.

Further information may be found on the “Let’s talk about money” website as well as on the Schuldenberatung website (in German only).

Journalists may address further enquiries to:

Annemarie Bauer
Tel.: +43/(0)1/24959-6007

How loan fraud works:

(The quotations relate to a fraud case that the FMA knows about and have not been changed)

  • Mr. M. is encountering difficulties to pay, an applies through a credit intermediary for a loan for € 50,000.00.
  • The loan is promptly approved by the credit intermediary, and then he receives a letter through the post from a fictitious bank that asks for the following payments to be made within a few days of each other:
    • “… we therefore confirm that a document was requested and a payment of € 1695 will be reimbursed 48 hours after your transfer is received.”
    • “…prior to the positioning process a certificate is required that confirms that no money laundering has taken place, followed by a payment of € 1959, which will then be reimbursed 24 hours after receipt of your transfer.”
    • “Your transfer has been credited to your bank, but your branch is demanding several items as proof that the credit intermediary and we are required to submit and we require € 1486 for processing this.”
    • “Based on your e-mail we are able to tell you that the transfer, since the transfer was not credited to your account yesterday, has been held up due to the waiting period for the transfer exceeding 1 month and was therefore cancelled yesterday, to allow it to be handled again this morning and at latest within 24 hours, and will be credited to your account, which we will do using the EXPRESS option to ensure that it happens quickly. For this chosen EXPRESS option, so that the transfer can be credited quickly, we require € 980 and can assure you that you will receive the transfer credited to your amount tomorrow.”
  • Advance payments totalling € 6,120.00 are therefore requested. This letter is signed by an employee of the bank that is apparently granting the loan.
  • Usually victims of fraud are placed under pressure until they agree to transfer money to loan fraudsters, and then the fraudsters disappear off the face of the earth, and in most cases the money is gone.