Reports indicate that South Africans are increasingly turning to loan sharks as banks tighten their lending criteria in response to a surge in bad debts compounded by high interest rates, and the impact of the increasingly high cost of living.
Because bank loans have become increasingly more difficult to obtain, consumers are borrowing from loan sharks, or “mashonisas”, who set their own fees and interest rates.
Chantelle Burrows, marketing executive at Atlas Finance, says that while it encourages customers to only borrow from regulated credit providers and always cautions them to be aware of loan sharks, this brings to light another significant concern: that of scammers purporting to be from Atlas Finance or other accredited loan providers.
“At any given time, we request the removal of on average 120 Facebook sites that have the same look and feel as our website and/or Facebook page, yet which have been set up fraudulently,” she says. “We work closely with Meta in this regard, yet there is a constant need to close these sites down. We see a similar issue with WhatsApp.
“It is concerning to see how quickly these groups spring up, and from a consumer perspective, how easy it is to be caught up by groups that appear to be legitimate but are wholly illicit.”
MicroFinance South Africa (MFSA) has confirmed the proliferation of unscrupulous lenders who exploit individuals who are in urgent need of financial assistance but lack access to traditional banking services.
“With the complexities and high costs of compliance driving many legitimate microfinance institutions out of the market, a void has been created that illegal lenders are quick to fill,” says Leonie van Pletzen, CEO of MFSA.
Burrows adds that consumers are faced with a perfect storm: fake websites or Facebook pages that look legitimate, thus making make it hard for most consumers to navigate legal sites and identify those that have been falsely established; the ever-increasing economic pressure on consumers thanks to factors such as high interest rates and ever-rising costs of power; and illegal moneylenders who exploit financial difficulties faced by hard-pressed consumers to their own advantage.
She offers some tips to anyone navigating the online loan space:
* Always verify the information through the accredited lender’s official channels.
* Never respond with your banking details without a contract.
* You will never be asked to pay any upfront fees to anyone on social media
* Never share your OTP
* Reputable lenders will never confirm a loan on Facebook and will never ask applicants to complete a loan application on Facebook.
* Beware of online instructions to scan a QR code for the loan payment to be done immediately or of any requests asking for bank card PIN or CVV numbers.
“We reiterate the importance of checking any site or message for legitimacy before proceeding with a loan application. It is our highest priority to ensure that we are lending responsibly in order to protect our customers’ financial well-being and part of that responsibility is alerting people to how easy it is to be taken in by scammers,” Burrows concludes.