BBB alerts Acadiana to online loan scams

Better Business Bureau of Acadiana is alerting local consumers and businesses to online loan scams. BBB has recently received numerous calls on online loan companies demanding up-front payments for loans, then disappearing after they receive the funds.
May 05, 2014

This scam is particularly bad because it takes advantage of those unable to obtain traditional bank loans and can least afford to be scammed.

Most people stumble upon the presentation online or learn about the loan offer from ads in local publications or classified sites like Craigslist.

Often, an unethical advance fee loan website will be created and taken down within a couple weeks only to be replaced by another operating under a different name and fake business address.

The websites look professional and might even put the victim through the rigors of filling out loan application forms—often requiring the victim’s bank account and Social Security number.

Eventually, victims are told they are approved for the loan and just need to pay as much as thousands of dollars upfront via money order or wire transfer to pay for insurance or collateral.

Those that pay never get the promised loan and are even sometimes tricked into giving even more money. 

Dishonest loan brokers also set out to scam consumers and businesses.

A loan broker may or may not require an advance fee before performing any services. Under the terms of an "advance fee" contract, the fee charged may not be refundable, regardless of whether or not the loan money sought is obtained.

In addition to the advance fee, the contract may state that the client will also pay a certain percentage of the total loan amount, 1 to 5 percent, at the time of the loan becomes effective-if the money for the loan is found by the broker.

Many kinds of business transactions require that an advance fee or a deposit be made before services are provided. Further, some loan brokers provide a legitimate service to their customers. However, BBB strongly advises would-be borrowers to exercise caution before paying advance fees to unknown firms.

BBB offers the following advice to avoid losing money to an online loan company:

  • Start with Trust®. Check with the BBB before doing business.
  • Be sure the lender is registered with the Louisiana Office of Financial Institutions at (888) 525-9414.
  • Avoid doing business with companies only accepting Green Dot MoneyPak cards or wire transfers. When a consumer gives someone the number on the back of a loaded card or wires money, it is like sending cash and is untraceable.
  • Do not provide personal information such as bank account or Social Security numbers online unless you are sure of who you are dealing with and the site is secure.
  • Read and understand any agreements, policies or terms and conditions before agreeing to any loan. Make sure the loan company has a verifiable physical location.

BBB works for a trustworthy marketplace by maintaining standards for truthful advertising, investigating and exposing fraud against consumers and businesses.

BBB of Acadiana services the parishes of Acadia, Evangeline, Iberia, Lafayette, St. Martin, St. Landry and Vermilion.