Are you bombarded by a huge amount of soliciting phone calls? Did it start right after you applied for a small business loan? If yes, you are not alone. Hundreds of small business owners receive endless soliciting phone calls. These spammers use sophisticated technology, use fake area codes and different numbers just to increase the chances of you picking up the phone. You cannot block the phone number and they won’t likely remove you from the calling list either.
Today, we will review these practices, find out how phone numbers are exposed, what to do if you are a victim spammers and how to avoid becoming one in the first place. You will be surprised, your data is almost always sold, resold and forwarded between lenders, and even the government unintentionally complicates this issue through a thing called UCC (Uniform Commercial Code).
☝🏽 Why do lenders and brokers even make cold calls?
The vast majority of small business owners with merchant cash advances or short term business loans are older and less tech-savvy. Most of the guys own mom and pop shops, restaurants and truck companies. Lenders, many of whom with Wall Street background, think that cold calling is the most efficient way to sell business loans to these guys. In reality, cold calling is extremely inefficient and that is why subprime loans are so expensive. Nevertheless, cold calling is a big part of American culture, it is still being used and it will exist as long as brokers receive commissions and merchants take loans. The devil is in details.
🏢 Leads, privacy, and UCC. How my numbers are exposed?
First of all, you probably wonder how they even get your contact information. It sounds easy, just collect publicly available data and simply call every single business in town, state or region. However, doing so is unsustainable, lenders and brokers had to find a way to find those looking for business funding, recent applicants, existing or past borrowers.
Internally, a prospective customer is called a lead. There are three main sources for these ‘leads’:
- Purchasing leads online
The industry is unregulated which means small very dishonest brokers or lenders might sell your information to others. Even reputable lenders have dishonest employees selling customer information. I saw information about customers of well-known lenders being circulated around. While this source of leads is borderline illegal, morally questionable and straight-up nasty, you will be surprised how widely it is being used.
- Previously submitted applications to multiple lenders
This source is less outrageous but as annoying as the first one. When you apply for a loan through a broker, you let your broker send your application along with contact information such as your phone number, address and email to multiple lenders. Brokers send your file to as many as 10 lenders at a time, basically throwing you like a piece of meat to predators. Meanwhile, lenders understand they are competing for you with many other lenders and try to get in touch with you as soon as possible. While they just want to make sure you pick them over others, 10 of them calling you and emailing is annoying. Remember, you are forever in the lenders’ lists of potential customers and they will solicit you in the future.
Therefore, use a reputable broker, that protects your data from lenders as well. Here at Richie Lending, we developed a unique proprietary system that keeps customer data hidden even from lenders. Using data science and encryption we submit customer’s file as an anonymous business and let lenders contact prospects only once offers are accepted. That’s how our customers never receive soliciting phone calls from lenders.
- Data from the Uniform Commercial Code (UCC)
There are situations when the government does something to protect us but in fact, harms us. The same happened to the Uniform Commercial Code or UCC. There are many resources explaining what the UCC is, we will publish an article explaining UCC in detail later on this year but shortly it is a set of laws regulating commercial transactions within states. The part of UCC that is applicable for small business lending is Article 1 which governs what is called UCC liens and fillings. Basically it is a database of all small business borrowers and everything that was used as collateral for loans. The database also includes information about all the businesses that are in default, previously defaulted or have any sort of liens.
Now, imagine I want to get a list of all business owners who received loans in the past or have collateralized business loans. I don’t need to purchase leads from the Internet, I can just go to UCC and get all the information for free, openly and absolutely legally.
A database that was built as a tool to protect borrowers became a tool for their unlawful solicitation. Companies hire data centers to collect information about UCC filings in every single state, combine it and get the most updated, most complete and truthful source of customers. While UCC doesn’t have contact information any sophisticated developer can match business with its contact information online. Unfortunately, it will continue indefinitely until the government takes action.
🧠 How can I avoid spam calls?
There are things you can avoid, but there are also things you can’t avoid when applying for a loan. For example, you can avoid exposing your phone number or email to lenders; but you can’t escape being listed in credit bureaus or UCC. You should mitigate the risk of having your data exposed and take the necessary preliminary steps such as:
- Protect or use a masked phone number. There are dozens of different calling or texting applications you can download on your smartphone. They usually provide you with an additional phone number. You can use that number every time you apply for a loan. Since the number functions just like a regular phone number, lenders or brokers will never have problems using that number for communications. However, they won’t be able to bother you in the future, even once your information gets to the databases.
- Avoid little known brokers with a questionable reputation. Research your broker and make sure you are aware of your broker’s reputation and practices. If your broker has 20 one-star reviews on google, that is not the guy you should trust your very personal information.
- Try new innovative tech companies or go with bigger brands like Fundera, Lendio or Lending Tree. There are many Silicon Valley-type companies out there, bringing technology and innovation to small business lending. They might offer better terms and better privacy protection. We, here at Richie, are also a technology company and developed a very unique system of protecting our customer’s data from spam calls.
📋 What should I do if I am already receiving spam calls?
Let’s say you did not see our blog so taking precautions is not an option anymore. Here are some tips that will help you in that situation. Unfortunately, it is almost impossible to stop phone calls completely once your data is exposed. You can, however, opt-out from some of the brokers or lenders.
Remember, you have a right to opt-out and request to be removed from the cold calling list. The law, in general, protects you from soliciting phone calls, however, to stop it completely you have to go through every single lender or broker in the country, which is virtually impossible. Even then your request to be removed from the list might not be fulfilled.
Brokers and lenders use sophisticated technology, create fake phone numbers, and unsubscribe you from that “number” while being able to solicit you from any other phone number effectively making it impossible to opt-out.
Still, here is what you need to try:
- Be very strategic and smart about opting out. Pretend that you are interested and ask the name of the company calling. Once you trick the broker to provide you the full company name, politely ask to opt-out. The very fact that you already know the company name will prevent the same company from ever calling you. If they ever decide to be suicidal and do it again, complain to the Federal Trade Commission. This strategy might help to decrease the number of companies, sadly you will have to go over dozens of calls before seeing any effect.
- Know your rights. Lenders and brokers can’t call you on weekends, holidays or after business hours. (This only applies to cold calls)
- Use spam detectors, download spam detecting applications to your phone. It will help enormously.
If nothing helps, go ahead and change your phone number. It is the only way to actually stop the calls.
PS: Do not, however, repeat your mistakes, follow our tips on how to avoid spam calls. Use reputable companies that will protect your personal data.