Loan scams, and how they work

The trick, in one sentence

You are offered a loan that is larger, cheaper or faster than anything else you have been offered, and to release it you must first pay something small. The something small is the entire business. There is no loan behind it, and there never was.

It is called advance-fee fraud and it is old, because it works. It works because the amount asked for is always small enough to feel like a formality next to the amount promised: twenty thousand shillings to release two million looks like a rounding error, right up to the moment the phone stops being answered.

The names the fee is given

Processing fee. Insurance. Registration. Clearance certificate. Legal fee. Stamp duty. Account activation. Courier for the cheque. Tax on the disbursement. Airtime so the officer can call you back. Every one of these is a real thing somewhere in the world, which is exactly why they are used.

The test is not what the fee is called. The test is the direction the money moves. If money is leaving you before a loan has arrived, stop, regardless of how convincing the explanation is. A licensed lender in Tanzania deducts its charges from the disbursement or adds them to the repayment. It does not ask you to send money first.

Newer variants worth knowing

The cloned institution. A real licensed lender's name, logo and licence number are copied onto a new page or a new WhatsApp account, and the number you are given is not theirs. Defence: get the lender's number from the register entry or their office, not from the message that contacted you.

The app that wants everything. A lending app asks for your contacts, your photo gallery and your SMS before it will consider you. Some then use the contacts to shame you into paying by messaging your family. No lender needs your gallery to assess a loan. Refuse the permissions; if the app will not work without them, the app was never the point.

The overpayment. You are "accidentally" sent more than agreed and asked to return the difference quickly. The original transfer is reversed or was never real; the money you send back is yours.

The middleman who will "push your file". Somebody offers, for a small consideration, to make an institution approve you faster. Either they have no such power, or the institution has a staff problem. Neither is a reason to pay them.

The pressure is the point

Fraud runs on urgency, because a person who is allowed to think will usually check. The offer expires today. The officer is doing you a favour. Somebody else wants the slot. Do not tell your family, they will not understand the opportunity.

That last one is the clearest signal of all. A legitimate loan survives being discussed with your husband, your wife, your business partner or anyone who can do arithmetic. Secrecy protects the person asking for it.

If you have already paid

Stop sending money. The second request is not the last one; it never is, and the story will grow to explain why one more payment is needed. Losing what you have already sent hurts less than what follows.

Save everything: the phone numbers, the names used, the transaction IDs and times, the screenshots, the account or till number you paid into. Call your mobile money provider's customer care the same day and report the transaction — sometimes, if it is fast enough, it can be held.

Report it to the police, and if the fraudster used the name of a real licensed institution, tell that institution too — they generally want to know, because it is their name being spent.

And tell somebody. Shame is what keeps this trade profitable: most people who are caught say nothing, so the next person meets the same trick with no warning. You are not the first and the fraud is not a comment on your intelligence.

Sources

• Public notices and warnings — Bank of Tanzania
• Register of Tier 2 Microfinance Service Providers, made under section 54 of the Microfinance Act, 2018 — Bank of Tanzania