How to Avoid Pay Day Loan Fraud
The bank has noticed an upswing in this type of fraud and would like to help educate our customers as to how this occurs, and what you can do to protect yourself or a loved one from such a scam.
“Pay day” loan fraud is a new trend our bank is seeing where customers apply online for a loan, and as part of the application process, are instructed to enter the online banking ID and password for their financial institution. Applicants are also asked for the answers to their online banking security questions. The bank has noticed an upswing in this type of fraud and would like to help educate our customers as to how this occurs, and what you can do to protect yourself or a loved one from such a scam.
Once a person enters their banking information into the online application, the unknown fraudster then enrolls in mobile banking on behalf of the applicant, submitting fraudulent checks for deposit through the bank’s mobile app. When the customer comes into the bank to receive their “pay day” funds, they are struck with returned checks that are fraudulent.
Customers applying for loans online that share their sensitive information are not taking into consideration that they have given scammers direct access to their checkbook, including the ability to issue checks from the bill pay feature of online banking.
It is never wise to share online banking credentials! In these cases, an applicant can unknowingly become a criminal suspect themselves as they are referred to as “money mules”, participating in moving money fraudulently. The applicant must then bear the burden of proving that they did not willingly engage in fraudulent activity often involving the police.
When enrolling in online banking, be sure to never share a banking ID, password, or security questions and answers with anyone. A reputable lender will never ask for that information. By following these guidelines, one can avoid a significant loss through a scam.