The internet has changed the way we do most everything, especially when it comes to shopping for goods and services. Consumers are increasingly turning to the web to buy books, purchase music, reserve hotel rooms, or book flights. They are also applying for credit cards, mortgage financing and personal loans through online lenders.
But how can consumers know for sure if an online loan provider is a legitimate lender or a scammer?
Online lenders can be your bank, credit union or other loan providers that are licensed to make loans in the state in which you live. It’s easy to verify the legitimacy of your own bank, but it’s not as easy when one is considering a personal loan from an unrecognized online lender.
Being listed in Google or Bing searches does not prove that they’re legitimate. In fact, search engines rarely do any security checks on the owners of the websites that are included in their search indexes.
The internet is a double-edged sword in this regard: legitimate lenders can now market themselves in other geographic areas that were once unreachable due to the costs involved in opening up a new store. At the same time, it can be difficult for many online shoppers to identify a bad player in the industry.
Fortunately, there are a variety of ways to confirm legitimate lenders – as well as spot potential scammers:
- Business address.
This is one of the first indicators of a potentially legitimate or illegitimate lender. Look in their Contact or About page to find their official address. Consumers should always be wary of sites that refuse to provide a physical location or address.
- Confirmation logos.
Many ecommerce websites now display “trust” logos from various agencies and directories to help convince shoppers that they’re real. The most common verification services are Verisign, Truste, McAfee and the Better Business Bureau (BBB). All four help to confirm that the business is real, because these organizations do perform their own investigations to confirm that the businesses do exist. However, visitors to the online lender’s site should always click on the logos. Those logos should link to confirmation pages on the websites of those verifying entities. If not, be wary of that site.
- State approval information.
Unless federally chartered, each online lender must be registered and/or licensed in every state it wishes to lend. The websites should have links to their individual state registration or licensing information.
- State registries.
Each state has a department or agency overseeing the financial institutions in its state. And most of these state agencies now have websites with online databases of approved lenders. Consumers can confirm that a lender is legit by checking with the state’s online registry or calling the specific department overseeing consumer loan providers in the state.
- Website domain registry.
Finally, consumers can also investigate the ownership behind the website. Just go to http://whois.domaintools.com and type in the website domain name. Then check to see who owns it and how long the domain name has been registered. If it is less than a year old or owned by an individual, it’s time to start getting suspicious about the website.
The internet makes it easy for companies to do business in different areas. Unfortunately, not all websites can be trusted. The good news is that the internet has also made it easy for consumers to check up on particular businesses. Online consumers do have tools to protect themselves from scam websites. But those tools and resources are worthless unless they are put to use.