How to Avoid Personal Loan Scams

Personal loans are a great way to consolidate your debt, pay down high-interest credit cards, or access money at a fixed rate when you need it. Sadly, many fraudsters prey on consumers who are looking for a personal loan or access to funds through other kinds of credit.


Scammers and fraudsters often try to trick consumers by pretending to be from a legitimate company like Upgrade. These scammers are trying to access your money, your bank account information, your identity, or all of the above. At Upgrade, your privacy and security is a top priority. If someone contacts you about a personal loan, you should know that:

  • Upgrade will never ask for an upfront fee such as an application fee, a security fee, or an insurance fee.
  • Upgrade will never ask you to send us money through a gift card, prepaid debit card, Western Union, or similar.
  • We will never ask you for your full credit card or debit card information.
  • We’ll never ask you to provide personal information via email such as your bank account number, credit card number, Social Security number, or password.

If you think you’ve received an email from a scammer pretending to be from Upgrade, please send it to us so we can investigate:

Top 6 ways to spot a personal loan scam

1. No credit check required

If someone promises you a loan without checking your credit, skip it. Reputable lenders look at your credit history to assess whether or not you’ll be diligent about repaying your loan.

Scammers, on the other hand, don’t care whether you’ll repay the loan. They are more interested in getting access to your money or your bank account information up front, with no intention of actually giving you a loan.

How to protect yourself: Review the lender’s website to understand all the application requirements. If it sounds too good to be true, it probably is.

2. Upfront fee in exchange for a “guaranteed” approval

One of the most common personal loan scams involves asking a borrower for an upfront fee before the loan is issued. In these cases, the scammer keeps the upfront fee and then disappears. This is known as an “advance fee scam.” Most legitimate lenders will not require any fees before the loan is issued.

How to protect yourself: Don’t pay upfront for the “promise” or “guarantee” of a loan. Before paying anyone, take a step back and ask yourself whether it feels fishy. Visit the company’s website and look for written information about typical fees. If you think you’ve received a scam offer from someone pretending to be from Upgrade, please send it to us so we can investigate:

3. Lender asks for a prepaid debit card or another unusual form of payment

If someone asks you to send them money on a gift card (such as an Amazon gift card), a prepaid debit card (such as a Green Dot card), through Western Union, or something else unusual, skip it.

Although a legitimate lender may have a good reason to charge you a fee, those charges are typically deducted from your loan and are not paid out of pocket. Scammers like to ask for prepaid debit cards because they are hard to trace, making it easier for them to steal your money.

How to protect yourself: If a potential lender demands an unusual form of payment, delete the email or hang up the phone. Visit the company’s website and look for written information about typical fees and acceptable forms of payment. If you think you’ve received a scam offer from someone pretending to be from Upgrade, please send it to us so we can investigate:

4. You feel pressured

Taking out a personal loan can be a big decision – don’t fall for an “urgent” offer. These offers can be tricks to force you into a hasty decision.

How to protect yourself: Take the time to research the potential lender and make sure they look legitimate. Review their website and check out trusted third-party reviews such as the Better Business Bureau. If you feel pressure to make an immediate decision, sleep on it and consider skipping it altogether.

5. Lender’s email address is fishy

One way to spot a scammer is if their email address doesn’t match the company’s website. An employee from a legitimate company won’t send you emails from their personal email address, but a scammer might.

How to protect yourself: Check the from-address on any emails you receive and make sure it matches the company’s website. If you receive an email from a personal account (such as an AOL, Comcast, or Yahoo email account), think twice.

6. Website isn’t secure

Some scammers create fake websites that look very similar to the website of a legitimate company. If you enter your information into a scam website, it could be used to steal your bank account information, your money, or even your identity.

How to protect yourself: Check that the website is secure by looking for “https” at the start of the website address or a padlock icon to the left of the website address. These signs mean that the website has been certified as secure and probably hasn’t been hacked.

These aren’t the only signs of a scam, so be careful. Learn more about protecting yourself from identity theft and credit card fraud.

What to do if you think you’ve been scammed

If you think you’re the victim of an advance fee scam or a personal loan scam, don’t panic. Here’s a checklist of steps to take:

1. Cut ties with the scammer. Don’t provide any more personal information or payment to the scammer. Upgrade will never ask you to make an upfront payment or to send funds through a gift card, prepaid card, or similar.

2. Report it to the authorities. Contact the FTC and your state’s consumer protection office to report the scammer. If you believe you’re the victim of theft, file a report with your local police department.

3. Report it to your bank or financial institution. If the fraudster pretended to be from a legitimate company, you should contact that company and report the incident. You may not get your money back, but it may help prevent the scammer from taking advantage of other people.

If you think you’ve received a scam offer from someone pretending to be from Upgrade, please send it to us so we can investigate:

Unfortunately, there are many kinds of scams out there. If you believe your identity or your financial data has been stolen, you should consider updating your passwords, freezing your credit profile, and more.