5 Steps to take if you are the victim of a loan scam

A person on their phone learning about protection from loan scams via Credit.org financial blogs

What to Do if You’re the Victim of a Loan Scam

Being targeted by a loan scam can be stressful and damaging, but you are not alone, and there are clear steps you can take to recover. Many scammers use fake loan offers to trick people into paying upfront fees or sharing personal data. If this happens to you, it’s important to act fast and follow the right steps to report the crime, protect your credit, and prevent further harm.

Step 1: Identify the Scam and Protect Your Accounts

Scams often begin with too-good-to-be-true promises, such as guaranteed approval or same-day funding with no credit check. You may be asked to submit fees before receiving anything or be rushed into decisions.

Red flags include:

  • No verified telephone number or physical address
  • Requests for wire transfers, prepaid gift cards, or crypto payments
  • Misspelled documents or unclear subject lines in email
  • Pressure to act without reviewing terms

Once you suspect fraud, stop contact immediately. Call your financial institution to secure your accounts and explain the connection to the scam. Then review your individual consumer reports through AnnualCreditReport.com. Consider a credit freeze if needed to prevent future misuse.

Learn more about spotting fraud in 4 Home Equity Scams You Need to Avoid.

Step 2: Report Scams and Create a Detailed Narrative

Start documenting everything that happened. This narrative will help you file accurate reports with multiple agencies. Include:

  • How the scammer contacted you and what they said
  • Names, phone numbers, or websites involved
  • What information you shared and what actions you took
  • Any money paid or attempted transactions

File a police report with your local department. While law enforcement authorities may not launch an investigation, having a report on file is important. Ask for a copy for your records, especially if you need to provide proof to creditors or insurance.

Then, report the scam to the Federal Trade Commission at reportfraud.ftc.gov and the Consumer Financial Protection Bureau. These agencies collect reports, identify trends, and may help guide you through resolving disputes tied to fraudulent business practices.

Two women working on a laptop at a table, engaged in a discussion about rectifying a loan scam.

Step 3: Report Fraudulent Business Practices to the Internet Crime Complaint Center

If the scam occurred online—such as through fake ads, fraudulent loan websites, or phishing emails—file a complaint with the Internet Crime Complaint Center (IC3) at ic3.gov. The IC3, run by the FBI, works with federal and other law enforcement authorities to investigate online fraud.

Your IC3 complaint should include:

  • A full timeline of events
  • Screenshots, email headers, and receipts
  • How you were targeted and your response
  • All related contact information

This report will enter a secure online database, where agencies use patterns and digital markers to find larger fraud networks.

Step 4: Protect Yourself from Identity Theft

Many loan scams lead to identity theft, especially if sensitive data was exposed. If you gave out your Social Security number, birthdate, or account info, take these steps:

  • Place a fraud alert with any credit bureau
  • Freeze your credit to block new accounts
  • Monitor your consumer reports for suspicious changes
  • Report identity theft to identitytheft.gov and get a recovery plan

Also consider how much of your data was compromised. Ask yourself, how much personal information did the scammer receive? Even small pieces—like your address or employer—can be misused in legal process scams or phishing attacks.

The FTC’s tools also explain how to deal with creditors, challenge false entries, and assert your rights under the privacy act system notices and other laws designed to protect consumers.

Step 5: Take Ongoing Steps to Prevent Future Scams

Once you’ve reported the incident and protected your identity, take time to prepare for future threats. Many scammers adjust their tactics quickly and begin targeting new victims through different methods. Focus on strengthening your long-term defenses.

Here are smart ways to prevent future attacks:

  • Learn to recognize other types of financial fraud like debt collection scams or grant offers
  • Watch out for impersonators claiming to be law enforcement partners or court officials
  • Don’t engage with threats tied to legal process or lawsuits without verification
  • Bookmark trusted sites like the consumer sentinel network (ConsumerSentinel.gov) to stay informed about recent scams

Also, review your digital habits. Avoid clicking on suspicious links and never give sensitive data over unsecured channels. Shred sensitive mail and opt out of unnecessary data-sharing whenever possible.

For long-term peace of mind, consider nonprofit services like credit counseling to help you regain control of your finances. At Credit.org, we offer personalized assistance and free education to help people recover from financial hardship.

You can also learn about protections under consumer credit laws by reading Consumer Credit Acts and Laws to Protect You and reduce future risk with 11 Tips for Avoiding Predatory Lending.

If you need help to resolve individual consumer reports, respond to debt collectors, report to the federal trade commission, contact us today for debt counseling or a credit report review.  

Jeff Michael
Article written by
Jeff Michael is the author of More Than Money, a debtor education guide for pre-bankruptcy debtor education, and Repair Your Credit and Knock Out Your Debt from McGraw-Hill books. He was a contributor to Tips from The Top: Targeted Advice from America’s Top Money Minds. He lives in Overland Park, Kansas.
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