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Advance Fee Loan Scams - Loan Brokers
Are you looking for a loan or credit card but don't think you'll qualify? Have you
been turned down by a bank because of your poor credit history? Scammers, often
calling themselves "loan brokers", are
looking for you! And they will try to scam you into paying a fee in order to get
a loan or credit card. That is money you will never see again.
You may be
tempted by ads and websites that guarantee loans or credit cards, regardless of
your credit history. Rule number one: Legitimate lenders never "guarantee" or
say that you are likely to get a loan or a credit card before you apply,
especially if you have bad credit, no credit, or a bankruptcy.
How to Recognize an Advance-Fee Loan Broker Scam
Look for these warning signs of a loan scam:
- The lender doesn't care about your credit history. A
lender may offer loans or credit cards for many purposes ' for example, so you
can start a business or consolidate your bills. But one who doesn't care about
your credit record should worry you. Ads that say 'Bad credit? No problem' or
'We don't care about your past. You deserve a loan' or 'Get money fast' or even
'No hassle ' guaranteed' often indicate a scam. Banks and other legitimate
lenders generally evaluate creditworthiness and confirm the information in an
application before they grant firm offers of credit to anyone.
- Fees aren't disclosed clearly or prominently. Scam lenders may say you've been
approved for a loan, then call or email demanding a fee before you can get the
money. Any up-front fee that the lender wants to collect before granting the
loan is a cue to walk away, especially if you're told it's for 'insurance,'
'processing,' or just 'paperwork.' Legitimate lenders often charge
application, appraisal, or credit report fees. The differences? They disclose
their fees clearly and prominently; they take their fees from the amount you
borrow; and the fees usually are paid to the lender or broker after the loan is
approved.
- The lender says they won't check your credit history, but
still wants your personal information, like your Social Security number or bank
account number? Go somewhere else. They may use your information to debit your
bank account to pay a fee they're hiding.
- The loan that is offered over the
phone. It is illegal for companies doing business by phone in the U.S. to
promise you a loan or credit card and ask you to pay for it before they deliver.
- The lender uses a name that is similar to a real bank's name. Crooks give their companies names
that sound like well-known or respected organizations and create websites that
look professional. Some scam artists have pretended to be the Better Business
Bureau, a major bank, or another reputable organization; some even produce
forged paperwork or pay people to pretend to be references. Always get a
company's phone number from the phone book or directory assistance, and call to
check they are who they say they are. Get a physical address, too: a company
that advertises a PO Box as its address is one to check out with the appropriate
authorities.
- The lender who is not registered in your state. Lenders and loan
brokers are required to register in the states where they do business. To check
registration, call your state Attorney General's office or your state's
Department of Banking or Financial Regulation. Checking registration does not
guarantee that you will be happy with a lender, but it helps weed out the
crooks.
- The lender asks you to wire money or pay an individual. Don't make
a payment for a loan or credit card directly to an individual; legitimate
lenders don't ask anyone to do that. In addition, don't use a wire transfer
service or send money orders for a loan. You have little recourse if there's a
problem with a wire transaction, and legitimate lenders don't pressure their
customers to wire money.
Finally, just because you've received a slick
promotion, seen an ad for a loan or credit card in a prominent place in your
neighborhood or in your newspaper, on television or on the Internet, or heard
one on the radio, don't assume it's a good deal ' or even legitimate. Scam
artists work hard to make you think they're legitimate, so it's really important
to do your homework.
How to Handle Debt
If you have debt problems, try
to solve them with your creditors as soon as you realize you won't be able to
make your payments. If you can't resolve the problems yourself or you need help
to do it, you may want to contact a credit counseling service. There are
Nonprofit
organizations in every state that counsel and educate people and families on debt
problems, budgeting, and using credit wisely. Often, these services are free or
low-cost. Universities, military bases, credit unions, and housing authorities
also may offer low- or no-cost credit counseling programs.
And please let us know about any
suspicious calls or emails you receive. We look for patterns so that we
can alert the authorities and victims to new scams, before it is too late!
References:
Resources and Related Scams