Peer-to-Peer (P2P) Lending Scams & How To Avoid Them

P2P lending scams

As we become more reliant on the internet for our daily lives, the risk of encountering online scams increases. Unfortunately, peer-to-peer (P2P) lending can be a target for scammers.

In P2P lending, two parties agree to lend and borrow money directly, without the involvement of a traditional financial institution. This can be a great way to access funds when needed or invest through Peer-to-Peer lending platforms, but it also carries a unique set of risks for fraud.

Without much P2P lending regulation, some investors have been scammed by P2P lending platforms over the years.

Red flags of P2P lending scams

Before you dive into P2P lending, it’s essential to be aware of some of the most common P2P lending scams. Here are some of the main red flags to look out for:

1. Unrealistic high returns

While P2P lending can in fact yield a high return, many Peer-to-Peer lending scams have promised unsustainable high returns for investors.

2. Unclear terms and conditions

Unclear terms and conditions can be a red flag to look out for. You should also be aware if it is copied from another platform or if there is a sudden change in the terms and conditions.

3. Fake reviews

Scammers often create fake reviews in order to make their offers look legitimate. Be sure to read the reviews carefully and look for any inconsistencies. If something doesn’t seem right, it’s best to stay away.

List of Peer-to-Peer lending scams

Here is a list of P2P lending platforms that have caused investors substantial losses:

  • Grupeer
  • Envestio
  • Monethera
  • Kuetzal

How to avoid P2P lending scams

It’s important to be aware of the common Peer-to-Peer lending scams and always research before entering into any agreement. If something seems too good to be true, it probably is.

Be sure to read the terms and conditions carefully and make sure you understand them before signing anything. Do also read reviews and research the platform before agreeing to anything.

If you follow these tips, you can protect yourself from P2P lending scams. Unfortunately, you can never be 100% sure as there is always a risk of fraud.