The loans have gained more popularity, especially with people who are in urgent need of money with the current highest price of gold than before. However, the rising demand for gold loans has also made the borrower vulnerable to gold loan fraud. The perpetrators of the crime are taking advantage of this by extorting money especially vulnerable individuals. When it comes to gold loan scams, one must be able to identify the signs of fraud to ensure that one does not fall prey to being associated with the cons, thus, one needs to be very cautious when it comes to gold loan products. 

Hence the following are the common types of gold loan frauds available in the market at present. 

Fake Gold Loans Is a type of gold loan scam where an individual will present fake or low-quality gold to the financiers to ask for loans. The scammers, alongside unscrupulous appraisers, affix false hallmarks to jewelry and pass it off as the real thing, thus conning creditworthy lenders into extending credit. This leads to major economic losses to the SHAs as well as the borrowers. 

Pledge of Misappropriated Gold and Identity Fraud Another major category of fraud is the actual misappropriation of gold goods that a trader pledges to be given credit. On some occasions, some of the employees or companies who go for gold loans replace the real gold with fake gold once the loans are approved. Worse, they may even sell the pledged gold without notifying the borrower, as observed most of the time. 

It is according to the words of Adhil Shetty, the Chief Executive Officer of Bankbazaar. com, “Cases of identity theft in the gold loan segment are on the rise where she flunks or forges identity documents intending to obtain gold loans in a different person’s identity, such that the real borrower only comes to know that they have been defrauded when they receive notices of recovery of loans they never borrowed. ” 

Fraud Gold Loan Companies New-age fraudulent companies are seen to have come up in the market offering gold loans but are not recognized by the proper authorities. These companies lure customers with very attractive loan offers of the gold but end up absconding with the gold or the interest rates they charge are very high making it impossible for the borrowers to reclaim their assets. 

New Emerging Scam With the advancement in technology, new scams that involve the use of the internet to operate is on display, especially online gold loan scams. They make fake websites and applications that mimic genuine loan lending companies and, as a result, defraud borrowers out of their data or even Pledge their gold through the same applications.

Gold loans are becoming more common these days and several people are getting into the trap of fraudsters while taking this loan below are the ways you can protect yourself from gold loan fraud. 

Ensure the authenticity of the lender This is important as you must be assurance that the lender you are dealing with is a legitimate and registered financial institution. Make sure they have certifications, and licenses as well as read customer reviews. This means that fraud Lenders may look legal yet they do not meet the standards of regulation thus there is a need to do adequate research. 

Valuation of Gold Items – Go Physical Gold appraisal ought to be done physically in the presence of a certified appraiser. Stay away from providers that try to use online or remote appraisals since this calls for scams to take root. Personal evaluation helps overcome the risks of scams; also, it will help to accurately evaluate the gold that was bought. 

Guard Your Paperwork One should never lose Identity documents and personal information under any circumstance. In case you find out that your identity was stolen, or someone was misusing identity stolen from you, report the incident to the relevant law enforcement agencies. Those who want to carry out fraud very often use stolen identity documents for credit, which results in serious legal and financial consequences. 

Keep Record of All The Transactions With regards to gold loans, ensure that you record all the transactions done properly. This involves; Appraisal certificates, loan agreements, and receipts of payments made for the intended purpose. When a complaint has been filed or in cases of fraud scrutiny, these records come in handy as powerful proof. 

Beware of all types of loans or credit offers Treat all incoming loans or credit offers with a pinch of suspicion especially when they are from people or organizations you do not know. This makes fraudsters employ forceful measures to compel the borrowers to put their gold as security fast with little or no checks. You should therefore take your time and cross-check on any offer as you continue through the process.