Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Feb 12, 2013

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News flash! The internet isn’t exactly a super-safe neighborhood. That’s an even truer statement when it comes to ecommerce and shopping online.

While we can all agree that online shopping has made life infinitely easier, it has also made it infinitely easier for cybercriminals to prey on unsuspecting or hapless victims. There’s always a new story of hackers breaking into private accounts, or organizing into online crime rings and wreaking havoc.

As troubling as these news stories are, most people simply shrug them off. After all, who cares if some major news network gets targeted by a cabal of hackers? Unfortunately, massive corporations aren’t the only victims of hackers.

Each year, millions of people have their identities stolen via electronic means. In fact, some experts argue that everyone will experience having their identity stolen at least once in their lifetimes. The problem has gotten so widespread—international even—that the federal government has devoted considerable resources to combating cybercrime. Several states have even followed suit. Oh, the wonders of the Information Age.

In any case, you need to protect yourself when you are applying for online loans or filling out forms that require personal information. Here’s how to stay on guard and stay sharp when applying for financing online.

Fishy Phishing

The IRS defines “phishing” as the deceptive used of fraud to trick unsuspecting victims into revealing personal and financial information that can be used to steal victims’ identities. One of the most common tools used by “phishers” is emails.

An email used by phishers deceptively appears to be from a financial institution, such as a major lender like Bank of America. Oftentimes, the message will say that it is urgent for the reader to respond with personal information by clicking a link in the email. This link leads the victim to a website that looks exactly like the major lender’s site, but unfortunately, it’s only a façade. There, the victim is asked to provide account numbers, Social Security numbers, and other personal information.

Should the victim willingly submit this information then the crime is accomplished and the cybercriminals obtain what they wanted. At this point the victim may be told that a loan is on the way, or the application process for the victim simply ends abruptly. With the information that the victim submitted, the cybercriminals can then drain accounts, spend the victim’s money, or use the financial information in order to steal the victim’s identity.

All in all, it’s bad news.

Fortunately, you can keep your eye out for several red flags and warning signs that will give the cybercriminals away.

Red Flags and Warning Signs

Cybercriminals can’t exactly hold a gun to your head, so they instead try to play on your emotions and “con” you into willingly submitting your personal financial information.

So when reading about a loan that just sounds like an amazing deal, stop and consider the following questions:

  • Is the wording too emotional or sensationalist?
  • Does it sound like something a bank’s marketing firm would write?

If you suspect something is amiss—however slightly—then stop entering your information into an online form, delete it, and, in the words of Obi-Wan Kenobi, “trust your instincts” before putting your fingertip to that “enter” key.

Bob Bunge, professor at the College of Engineering & Information Sciences at DeVry University, gave us a few more tips for online applicants to consider.

“First, consider the reputation of who you are applying to. Is this a well-known company, or Brand X? Do you have an existing business relationship? How did you get this form in the first place? Did you go out and seek the loan? Or did the offer seek you? If the offer came to you unsolicited, be triple-extra careful before filling out anything!” said Bunge.

If you suspect that your identity has been stolen then you can verify this by checking your credit report. Additionally, monitoring your bank statements can also reveal if there are any suspicious or unwanted purchases being made in your name. Being diligent is the surest way to catch a crime in progress.

“Thieves can turn your identity into money for them,” said Bunge. “Usernames, passwords, Social Security numbers, account numbers, phone numbers, addresses, mother’s maiden name, anything you would put onto a credit card application is good as gold to an identity thief.”

Consumers should also be on the lookout for poor grammar and English. With the internet being a global communications system, it is very likely that the cybercriminals you may come across are outside of the United States’ borders. Chances are, they won’t have the best English, or even English as it is understood grammatically by most Americans. However, this in itself isn’t foolproof.

“Don’t rely on bad grammar or funny spelling alone to tip you off to fraud sites,” said Bunge. “International crime syndicates have been brushing up on their English, and they are getting smoother and slicker all the time.”

A closer look at the forms you are filling out, as well as the website that’s hosting the application, can also aid you in protecting yourself online.

Poorly Formed Forms

So let’s assume you are filling out a website’s form for an online loan. That’s great! You’re well on your way to getting some cash you need.

Wait a second.

Hit the brakes.

Let’s take a look at the form you are filling out and the website it is on.

Websites that look poorly crafted are probably not from legitimate lenders, who often spend costly sums to put on excellent appearances and browsing experiences for their online customers.

“If you are getting a bad feeling about anything, better to break off and reconsider. The best process is one in which you first choose a loan provider, then go to that provider’s site. With all security tools turned on and active, verify to the best extent you can that the site is a true reputable business site,” said Bunge.

Likewise, suspicious looking forms should also be avoided since they can be a telltale sign that they were created by a cybercriminal. If it looks suspect or poorly made then chances are it was not created by a professional.

“The loan application itself should not raise any red flags in your mind. If you get unusual questions—like asking you for a password for asking permission to connection directly to some other account—alarm bells should be going off in your mind! If you cannot imagine a business reason for the information you are being asked to provide, then that should tell you something,” said Bunge.

Do Your Due Diligence

Cybercriminals, for all their malice, must still convince a customer that they are located within the US. This is because all but the most naïve online consumers would only do business with a lender based in the US. Since most websites list their address and phone number, this is a great place to start with due diligence.

Simply calling a company’s number or verifying their place of business are the surest ways to know you are dealing with a legitimate company. A level of in-depth research is required though since many overseas businesses can maintain PO Boxes, US-based phone numbers, and false offices within the US.

Contacting your state’s attorney’s office, the FDIC, or other government regulatory bodies is a great way of finding out if a lender is even legally allowed to exist within the US as a commercial entity. All lenders must maintain one or several licenses, meaning that there will be verifiable government records of their accurate contact information.

Stay Sharp and Keep Swimming

Be it a mortgage, auto, student, or personal loan, you will need a loan at some point in your life. That’s just a given.

There is a very good chance you will get this loan online. Don’t panic at the prospect of having to submit your personal financial information online. Rather, trust in your ability to remain aware and suspicious of forms and any transaction online involving money.

Remember, the first step in avoiding cybercriminals’ traps is knowing that they are out there and exactly how they can take advantage of you.