Within the past year, more than 100 suspects have been arrested in Singapore for involvement in fraudulent money lending activities. There are instances where the borrower has been forced to repay more than 10 times the amount they borrowed. Illicit money lending has been a constant threat for this otherwise useful industry. Loan sharks tempt people in dire requirement of money to be partners in their activities like gambling abroad. When the borrowers are unable to pay up due to the unreasonable terms, they are harassed. This is exactly why you should avoid borrowing from any unlicensed moneylender and should always opt to borrow it from a licensed money lender. But how would you identify them? Here are some signs to watch out for.

How to identify an unlicensed moneylender?

First things first, check out the list of licensed moneylenders in Singapore. If don’t find it there, it could a warning sign to borrows. Also, check whether your lender is:

• Asking for your SingPass password and ID. This could be to access confidential information and use it against you.
• Talking in an abusive manner, or threatening you. It has been seen that loan sharks use other debtors’ numbers while making harassing calls.
• Retaining the debtor’s NRIC card or personal documents like driving license or passport.
• Asking you to sign on an incomplete/blank Note of Contract regarding the loan
• Granting loans without providing you with a Note of Contract copy or without explaining the terms of the loan fully.
• Approving a loan before receiving documents like salary slips and income tax assessments and your loan application form.
• Retaining any amount of the principal.

If you notice any of these signs, report immediately to the Registry of Moneylenders with the necessary information.

Identifying advertisements from unlicensed lending companies

Licensed lenders can advertise only through the following channels.

• Consumer directories in print media or on the internet
• Company website
• Advertisements placed inside the lender’s business premises, or on the exterior.

Watch out if a certain moneylender advertises elsewhere. Generally, unlicensed lenders have been found to send out flyers, text messages or emails informing you about their services. Report such companies.

Common SMS tactics

Effective from October 1, the cap on moneylenders’ interest rates is at 4% instead of 20%. This is for debtors with annual income below S$30,000. This law has encouraged unlicensed lenders to use SMS tactics to con borrowers. The attempt is to get prospective debtors to respond and deceive them into borrowing money illegally. Watch out for the following tactics.

• You could receive a text message saying that the loan amount has been deposited to a certain account number and that you are liable for the loan.
• You could receive a text message asking you for the amount of money you need, deliberately assuming that you did send a message asking for a loan.
• Impersonation of licensed money lenders is also common in text messages.
• Loan sharks also send text messages pretending to be a helpline that can help you get rid of harassment and consolidate the debt.

You could also be encouraged to respond to a number via call, text or WhatsApp to avail guaranteed approval. Watch out for any such signs.