The offer of a loan at an interest rate of only 2% per annum seemed suspicious from the start, mainly because no one in South Africa would offer a loan at 2% with a preferential overdraft rate of 9% .
Second, the offer was made through an unsolicited text message without any indication of the identity of the sender.
Further information was only a WhatsApp message away, with spelling, punctuation and grammar errors removing any doubt that this attractive loan offer was fake.
“Cash Loan Company Limited is a legitimate and well-known South African and British loan company based in South Africa and the United Kingdom,” he proclaimed, but he uses an email address. Google mail and has no website.
“We offer loans to individuals as well as organizations who intend to renovate homes and institutions, consolidate debt, refinance and also set up businesses. We grant our loan in USD and GBP, RAND and any currency of your choice.
“Blacklisting may apply, no credit check, debt review or court order may apply. ITC can apply,” according to a lengthy message, signed by a Mr. Jackson.
The message asked for my ID number, title, surname, first name, phone number, address, loan amount, loan term, monthly income, salary date, monthly expenses and profession.
Jackson was apparently only satisfied with a partial name, a one-digit fake ID number less than a potentially genuine number, my profession, and whatever I told him my salary was. He didn’t ask me the name of my employer, or ask why I had failed to send a list of monthly expenses.
The fact that the loan was approved within 30 minutes proves that Cash Loan Company Limited does not provide loans.
Within an hour of receiving the first text message, Jackson issued a long list of regulations in the National Credit Act (NCA) – the most important of which relate to the need to do proper credit checks on applicants and to ensure they can afford the credit offered to them.
Jackson did not have adequate information to perform a credit check, nor did he request a copy of a pay stub or proof of identity and address.
He “confirmed” that Cash Loan Company Limited is registered as an approved lender in accordance with NCA requirements, but could not provide a registration number.
The National Credit Act applies to all credit agreements between consumers and any credit provider in South Africa, whether it is a personal loan, store credit, credit card, micro-loan or mortgage bond. Some sections even apply to a pawnbroker lending money for valuables.
Anyone offering credit to a consumer or lending money must be registered as a credit grantor with the National Credit Regulator. Any person or entity that is not registered cannot offer loans or other forms of credit.
The scam behind the 2% loan offer was predictable. I had to pay an initial administration fee of R1,550 before I could receive the R10,000 loan.
“Congratulations, you have successfully approved, please send us your bank details where you would like your loan money to be transferred and also tell us now what is the easiest way for you to send the fee now and keep keep in mind that the fees you pay will now be refunded on your loan when transferring the money to you now,” Jackson wrote.
A “loan document” explained the terms of the fees: “In relation to the preparation of security documents, agreements and a lawyer will only act for the borrower/charger and the remuneration of the lawyer will be in accordance with the scale applicable specified on the basis of the guaranteed or financed amount.
“Processing fee of R1,550 must be paid by second party to begin due diligence, preparation of security paperwork, agreements and loan documentation, all requested information provided and satisfied verifiable.”
Another WhatsApp message requested that the administration fee be deposited into an FNB bank account belonging to an individual, Nengovhela Livhuwani, rather than a Cash Loan Company bank account, adding “when making a transfer, it must be ‘instant payment’.
Moneyweb questioned the bank account with FNB, outlining the background to the investigation. A spokesperson responded that the FNB is committed to investigating every allegation of fraud in accordance with its zero tolerance approach to crime.
“This is in line with our commitment to ensure that all of our bank accounts are used and maintained in accordance with all applicable laws. We encourage any victim of suspected fraud to report such incidents immediately through our Anti-Fraud Contact Center or the one of our banking channels.
“Further, we urge the affected party to file a criminal complaint with the appropriate law enforcement authority,” the FNB said.
Although the FNB has said it is unable to release information regarding specific bank accounts, it takes immediate action if there is evidence of criminality.
FNB obviously saw something wrong and closed the account, as Jackson sent new account details for the administration fee payment the next morning.
This account belonged to another person.
Jackson explained in a phone call that the account details changed because “the first agent is unavailable.” He got angry when he was called.
“Since you thought this was a joke, I’ll be sure to report you as you said you reported our first bank account,” he wrote in a final post.
It’s hard to fathom people falling for scams like these. Countless errors in messages and documents clearly show that there is something wrong.
Read: Moneyweb reader embarrassed over falling for crypto scam
There were major errors in Jackson’s document that was supposed to serve as a loan agreement. For example, the document states that the R10,000 loan was to be repaid over one year, totaling 108 monthly installments of R842.39. Immediately after this incorrect calculation, another states that there are 108 monthly repayments of R108.66 and a final payment of R10,108.66.
Scammers are likely still making money, despite warnings from banks and other financial institutions, the SA Reserve Bank, the Financial Sector Conduct Authority (FSCA) and consumer organisations.
Scammers wouldn’t put in hours if they weren’t making money.
And there are hundreds of them. In just two days, I received loan offers from dubious entities and people claiming to represent well-known financial institutions.
These included a Covid-19 relief loan from Sanlam and low interest loans from Recharge Finance, Everest Finance, Moneyspot Finance, Sanlam Finance (again), CashWorld, DirectAxis and DNR Cash Loans.
Much of the documentation from different directions looks so similar that it probably comes from the same place. Where can I buy a franchise in the fake loan business?