Advanced Fee Loan Scams
The BBB has witnessed a national trend of advance fee loan scams. These scams target individuals who are having trouble obtaining cash or credit. Customers are lured by advertisements and direct mail pieces promising "guaranteed" loans - regardless of credit history - for advance fees running between $50 and several hundred dollars.
However, you must pay an advance fee before obtaining the "loan". These so-called loan brokers don't lend money directly; they claim to act as money finders and ask for an advance fee in order to prepare a loan application and present it to prospective lenders. But these firms cannot guarantee loans, despite their promises of unlimited funding sources. In many cases, brokers fraudulently pocket advance fees, make no effort to find the funds promised, and the customer loses money.
Recognizing Advance Fee Loan Scams
Advertisements that "guarantee" or promise loans usually appear in the classified section of newspapers and magazines as well as the Internet. These ads feature toll-free "800" numbers or "900" numbers that result in charges to your phone bill. Other advertisements include telemarketing "cold calls" or flyers in the mail. In addition, companies normally use delivery methods other than the United States Postal Service, such as overnight services, to avoid prosecution by postal authorities.
According to the Federal Trade Commission's Telemarketing Sales Rule, if someone guarantees or suggests that there is a strong chance they can get or arrange a loan or other form of credit for you, it is AGAINST THE LAW to ask you to pay, or accept payment, for their service until you get your credit or loan.
If you cannot obtain money or credit from conventional sources close to home - such as banks and credit unions - it is unlikely to be found through a classified advertisement, a telemarketing "cold call," a "900" number, or a flyer sent in the mail. Ask yourself: why would far-away "lenders" be more likely than local financial institutions to provide you with money?
And remember: a company's money back guarantee is no good if the company closes it doors.
If you feel you have been subject to an advance fee loan scam, contact:
Federal Trade Commission (FTC)
Department of Law
Attorney General Consumer Fraud Bureau
This report is general in nature and is not intended as a reliability report on any company, service or product.