Australians who lose money through online loan scams may never be able to get their money back, especially if their scammers are based overseas.

The Australian Securities and Investments Commission (ASIC) has issued a new warning after it recorded an increase in the number of victims who have lost thousands of dollars to scammers posing as genuine loan companies online that seek upfront payments.

“The scammers appear to be operating from overseas, and have impersonated genuine Australian companies and Australian Credit Licence Holders,” ASIC said.

“After making a loan enquiry online, the victims generally receive a telephone call or email from the scammers advising them that they qualify for a loan, sometimes for a larger amount that they originally applied for.”

Fake loan contracts that look legitimate, and an Australian credit licence number or Australian Company Number that belong to actual Australian businesses with no link to the scam are produced to victims. In many cases, scammers also provide an Australian phone number that’s re-routed to make it seem like they are located within Australia.

Victims are told that they must pay cash upfront to cover the insurance or fees for the loan. This is usually to an Australian bank account that’s set up to specifically receive these payments. The deposits that have been requested are usually in the thousands per person.

One victim, Peter, had enquired about a $60,000 loan to purchase a boat. Following his enquiry, a fake lender contacted Peter by phone and supplied an Australian Credit Licence Number. ASIC’s MoneySmart case study notes that after signing documents and emailing copies of his identification, the lenders asked Peter for a $3,000 insurance cover for the loan.

However after the payment was made, two weeks passed with no contact from the lenders.

According to ASIC, it is unable to pursue these type of cases as the scammers are usually working from overseas.

ASIC’s Deputy Chairman Peter Kell said consumers asked to give upfront payments before receiving a loan should “treat the proposed transaction with a great deal of suspicion. This is a classic warning sign of a scam.

“Legitimate lenders who are authorised under the credit laws in Australia will generally not request that any fees be paid upfront as these establishment costs are usually included in the loan and repaid over time,” said Mr Kell.

Loan borrowers can avoid being scammed by checking that the business they’re dealing with is listed in the public domain.

ASIC also advises people to do their own research on the loan company, and not simply rely on the information given by the lender.

Before getting the loan, ASIC says loan seekers can avoid being scammed by:

  • Checking that the company is real by calling their publicly displayed phone number. This will be the most important step, as scammers use licenced companies and appear legitimate.
  • Checking if the company’s name is on ASIC’s unlicensed companies list. If they are, do not deal with them.
  • Checking ASICS Connect and search within ‘organisation and business names’ for their Australian Company Number (ACN).
  • You can also phone ASIC on 1300 300 630.

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