Archive March 2019

How Do Dishonest Loan Companies Extort Money?

Although a number of actions against dishonest loan companies have been noted in recent years, it still does not discourage dozens of audacious fraudsters from using unfair practices in this sector. Every year, hundreds of Poles fall victim to it. How do dishonest loan companies extort money?

Fraud and loan market, unfortunately, are very similar issues. It must have been many years and tens of shocking stories about abuses that resulted mainly from the imprecise law to tighten regulations on popular payday loans and other non-bank services.

What is worse, many fraudsters operating in the sphere of the loan market are not those providing private loans, but registered loan companies soporific vigilance of many consumers. Despite the changes in the law in March 2016, clever fraudsters still successfully carry out many unfair practices, robbing thousands of zlotys and doing it often in a way difficult to detect by law enforcement agencies.

In the activities of many cheaters, you can find some regularly repeated practices and schemes. It is good to point them out and regularly describe them in order to sensitize the widest possible range of consumers to the challenges of looking for loans. And even though the market in recent years has been saturated with a large number of honest corporations operating under clearly defined conditions, it is better not to be aware of the situation – it is better to be aware of potentially unfair practices at the back.

How do dishonest loan companies extort money?


How dishonest loan companies extort money

In the light of currently binding regulations called so-called the anti-usury law , it is now much easier to define the basic scope of the loan fraudsters’ actions. Previously, due to the lack of defining dedicated provisions, loan companies operated on principles generally accepted in the Civil Code. It was difficult then to make a comprehensive list of practices justifying why, for example, billing horrendous commission costs is unfair.

Let us then provide a list of practices which in the light of the anti-usury law are breaking the law and can be treated with certainty as fraud and extorting consumer money.

  • Failure to inform the consumer about the cost of the loan and not to provide information about them on the website.
    – The signs of deception may also carry deliberate marginalization of these data, placing them in small print in an unseen place or “hiding” on difficult to track subpages.
    – At present, the costs of loans and payday loans can not be more than 25% of the loan amount and 30% of its amount per annum. Costs are a commission and an administration fee – interest
    – Thus, for example, offering a payday of PLN 5,000, the additional payment of which for any reason is, for example, PLN 2,500 or another suspiciously high amount, certainly is a fraud.
  • Charging higher costs of reminders and reminders than specified in the Act.
    – I am talking here about penal interest in circumstances where the consumer is unable to pay the loan timely and the company takes criminal and admonishing actions.
    – In the past, it often happened that dishonest lenders screened the costs of penal interest and prompts to horrendous ceilings, which often reached amounts close to half or even equal to borrowed sums of money.
    – In the light of the current provisions, penalty interest can not be more than 15% of the total loan amount (six times the Lombard rate of the National Bank of Poland).
    – So if, for example, a loan company wishes, for example, 800 zlotys of penalty costs for a loan of PLN 2,000, it is an obvious attempt to cheat and extort money.

Other examples of extorting money by loan companies

The abovementioned examples of unfair practices of loan companies are, of course, the tip of the iceberg. Creativity of cheaters often surprises even experts from the financial market, although in recent years there has been an increased interest in describing and scoring fraudulent practices. Let us list some of the popular fraudsters’ practices on extorting money from consumers seeking loans.

  • Offering a loan for a photo or a scan of an ID card.
    – A loan to which only sending a photo or scanning an identity document is required without any other formalities and requirements should lead to a red lamp on each consumer.
    – The situation in which only a scan of evidence is required can lead to a situation where fraudsters want to extort from the consumer data, to … yourself for a stolen identity to incur, for example, a payment or other service, which is required to present a personal ID.
  • A loan from an uncertain company.
    – Some scammers like to set up companies with a complicated ownership structure.
    – The website usually tries to inspire trust by project, imitating the most popular competitors.
    – It is worth checking the contact tab. 
    – Suppressing information about, for example, an entry in the National Court Register, etc., may also lead to believe that the company has not obtained permission to operate from the Polish Financial Supervision Authority. Thus, it works illegally.
    – If the above information is missing or false, you should stop investigating the offer of a dishonest lender.

An example of unfair loan practices on the example of Rapilo

In September 2018, we wrote about a company whose offer is an example of an extremely bold and dangerous fraud. Rapilo, in a way, cumulates the above-mentioned standard features of an unfair loan company, as exemplified by the following selected parameters.

  • No contact information.
  • There is no clear information about the cost of the loan and its type.
  • In addition, the above unspoken feature – Rapilo requires paid SMSes and additional costs during registration, although the loan has not yet been granted! It’s a classic form of money extortion.
  • The company is a sole proprietorship, without the SA’s consent to function as a loan institution.

How do clients defend themselves against unfair practices of loan companies? Who should report phishing attempts?

The most popular entity to which unfair practices can be reported is, for example, the Office of Competition and Consumer Protection. Despite the introduction in March 2016 of the so-called anti-usury law, this office is constantly recording a growing number of notifications about various types of irregularities in the functioning of selected lenders. This is confirmed only by the conviction that many cheaters can not scare away even tightening the law.

In addition, if you suspect that the company, for example, does not have the SA’s approval of the activity or obviously breaks the law (too high costs of loans), it will also be appropriate to submit a notification at a nearby police station.

In this way, we will not only contribute to the fight against fraudsters on the loan market, but will also protect potential dozens of consumers from falling victim to extortion.

Small Business Loan – Immediate Online Credit

Not only individuals, but also small businesses have to take a larger amount of money every now and then to make some business-specific important purchases.

Anyone working with low profit margins and reinvesting the capital in their own company will sooner or later not get paid for a loan.

Meanwhile, many banks offer a loan for small businesses. The loan is an important financing element in a well-regulated company.

Almost every company has a mix of equity and credit to create a healthy balance. As cheap as a loan is currently available in Germany, the borrower is so almost cheaper away, as with the taxes he would have to pay a larger amount of equity.

Where can you find cheap loans?

Where can you find cheap loans?

In order to survey the large number of potential lenders, whether banks or even state economic development agencies, the Internet offers a unique source to compare different types of loans in terms of their duration, cost and required collateral.

However, in general one can observe that, with suitable collateral and, in the best case, solvent guarantors, many banks and credit institutions will grant such a loan. Many sites offer different loan types to compare for free and to find out the best conditions for their own small business.

A timely comparison is the best way to ensure good conditions and to go well prepared for the application. In principle, many variables can be adapted exactly to the needs of the trader. In particular, the level of payment and the duration of the loan are often negotiable.

How do I apply for a loan?

How do I apply for a loan?

Although today’s transactions are fast and secure over the Internet, the same collateral and evidence banks would expect from credit seekers can still be provided. Thus, various evidence must be provided that it is a legally registered small business.

Also regular business figures are often called in order to have an overview of the development of the solvency of the company. Among other things, this includes the last tax assessment as well as a standard business evaluation. Highly automated online banks are happy to help with easy-to-use tools and help them choose the right loan.

Different types of loans

Different types of loans

If you are interested in a small business loan, you can choose between several different models. The individual products differ in terms of purpose, groups of people, availability, lending volume, collateral and donors.

A high number of consumer loans has a lending volume of € 5,000 to € 50,000. If the upper limit of the respective loan is € 5,000, it is a small loan. Most financing products are not tied to a specific purpose.

However, you should inform yourself in advance exactly about the respective modalities, so as not to take any risks on this point. Increasingly popular is the online loan. These are installment loans or consumer loans, which are completed over the Internet.

A major advantage of this type of loan: The processing is very quick, so these models are also referred to as instant, direct, express or quick loan. In the category of loans without an earmarking also the credit without Schufa falls. Since there are unfortunately some black sheep in this area as well, you should first check each provider comprehensively for its seriousness.

Other loan types

Other loan types

The installment loan is also in great demand. As the name implies, the loan is repaid to the creditor in monthly installments.

The interest rate and the amount of the payments usually remain the same over the entire term. More specifically, these are installment credits in which the rate is composed of interest and redemption portions. The interest, ie the annual percentage rate of charge, is calculated on the remaining credit amount. The longer the contract period progresses, the more the remainder of the debt goes down – and the debtor has to pay less interest. To compensate for this, the repayment share increases.