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.

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