How to Distinguish Honest MFIs from Scammers?

How to Distinguish Honest MFIs from Scammers?

How to Distinguish Honest MFIs from Scammers?

If you urgently need money, but there is nowhere to take it, you can contact a microfinance organization (MFI). But be careful: fraudsters may be hiding under the guise of MFIs. We tell you why illegal organizations are dangerous and how to protect yourself from them.

Why is it risky to turn to illegal immigrants?
Borrowing from scammers is just as dangerous as trusting them with their money.

It is beneficial for criminals to drive you into a debt hole.
According to the law, MFIs cannot infinitely accrue interest, penalties and interest on microloans . Even if you delay payments, your debt to a legal MFI cannot exceed the loan amount by more than 1.5 times. When the amount of debt reaches this limit, the MFI is obliged to stop charging interest, penalties and interest. Fraudsters do not limit themselves – often debt increases tenfold. There are cases when apartments were taken from debtors to pay off an initially small loan.

You may be forced out of debt in the truest sense of the word.
The law prohibits black lenders from claiming debt repayment, even through a court of law. Nevertheless, they transfer debts to illegal collectors or themselves use threats, psychological pressure and even physical violence.

Your personal data will be at risk.
Illegals will not miss the chance to use the data of your passport, bank account or card that you provided them when applying for a loan. For example, they can arrange other loans in your name.

You will lose your invested money.
Some MFIs have the right not only to issue loans, but also to raise money from individuals and companies . But if fraudsters, for example, organizers of a financial pyramid , disguised themselves as MFIs , you will have to say goodbye to your investments.

Before concluding an agreement with an MFI, you need to make sure that you are dealing with a legal and honest company.

Rule number 1. Check if the organization is included in the state register of MFIs
A professional lender should be included in the list of legal financial organizations . If the company is not in the state register of MFIs, these are scammers who disguise themselves as MFIs.

Rule number 2. Find out which self-regulatory organization includes MFIs
An MFI is required to be a member of one of the self-regulatory organizations (SROs). Now there are three of them: Union Microfinance Alliance , SRO MiR and SRO Unity . Self-regulatory organizations set professional standards and control the work of their members. On the website of each SRO there is a list of MFIs that are part of it.

If you cannot find an MFI in any of the SROs, this is a warning sign. Perhaps she was expelled from the self-regulatory organization for violating standards – it is better not to mess with such an MFI.

Sometimes a conscientious MFI may not be on the list of SROs for a short time, if at that moment it moves from one SRO to another. But there are 90 days for such a transition. If an MFI does not join the SRO within this period, it will be excluded from the state register of MFIs.

Rule number 3. Carefully study the documents before signing them
Even if you are dealing with an MFI, which is listed in the state register and is an SRO, vigilance will not hurt. With your signature in the documents you confirm that you fully agree with the conditions that the company offers you. Do not rush to sign papers if you are not clear on all the points.

By law, you have the right to take five days to think and study documents. During this time, the terms of the contract for you can not change.

Pay particular attention to the following details:

1. What documents do you propose to sign
If you borrow money, it can only be a consumer or mortgage loan agreement and a pledge agreement.

In no case do not sign agreements and contracts that allow the sale of mortgaged property without a court order: a lease, sale or gift agreement. Otherwise, the company will receive the right to sell your property without your knowledge in case of delay in payments, even a small one.

If you decide to invest in an MFI, this should be a loan agreement (the organization takes the money from you).

What are you risking when you are inattentively reading documents or not reading documents at all, you can find out from the text “What dangers a contract may hide” .

2. Are the details of MFIs correct?
Be sure to verify the data in the contract and in the state register of MFIs : full and abbreviated names, ID, address. Fraudsters often copy sites of well-known MFIs and use similar names, logos, fonts. Reconciliation of details in the contract will avoid a trap.

3. What conditions are offered to you
If you intend to take a microloan, the full cost of the loan in percent and in rubles should be indicated on the first page of the contract in the upper right corner in a square frame .

According to the law, the maximum interest rate on a short-term microloan (up to 1 year) is 1% per day. That is, the maximum overpayment, for example for 30 days, will be 30%, and for 90 days – 90%.

If you want to invest savings in MFIs, the contract should indicate the return on investment : in percent per annum or in rubles. It should also be written there when you return the invested amount and pay interest.

Rule number 4. Do not believe loud promises
You should be wary if you see something like this in an MFI ad:

“Open a deposit at a profitable interest”
Only banks can open deposits. Neither MFIs, nor any other financial organizations have the right to offer this service. If you come across this, they try to deceive you.

“Invest and borrow any amount”
MFI loans are limited. A person can receive in one organization no more than 1 million rubles if the MFI is a microfinance company (IFC), and no more than 500 thousand rubles if the MFI works as a microcredit company (MCC), an individual entrepreneur or legal entity – a maximum of 5 million rubles.

The size of investments in MFIs is also limited. Investments cannot be lower than 1.5 million rubles. Moreover, it is allowed to invest in only one type of MFI – microfinance companies (IFC). If an MFI offers you to get around these restrictions, it violates the law.

“All investments are insured!”
Investments in MFIs are not insured by the state . If you are convinced otherwise, it is a hoax.

Most often we are talking about a completely different insurance. MFIs can insure their property or the responsibility of their leaders – but not your money. If the company goes bankrupt, most likely you will not be able to fully return your investments. Read more about this in the article ” MFIs: how to make money from them .”

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