Educational Consumer Tips
Advance Fee Loans
The scenario is all too common: a consumer receives a call or e-mail or sees an advertisement for a pre-approved loan or credit card and calls to receive an application. The company says yes, they can offer you a loan regardless of your credit history, if you pay an up-front "insurance," "security," or "processing," fee in advance. Too often, those with bad credit - who can least afford it - end up losing their up-front fee and never hear from the company again.
According to the 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's against the law to ask you to pay - or accept payment - for their services until you get your loan or credit.
The BBB, along with the Federal Trade Commission, offers the following points to keep in mind before you respond to ads that promise easy credit, regardless of your credit history:
Wiring money is like sending cash; once it’s sent, you can’t get it back. Con artists often insist that people wire money – especially overseas – because it’s nearly impossible to reverse the transfer or trace the money.
Never wire money to strangers or someone you haven’t met in person.
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.
If you apply for a real estate loan, it is accepted and common practice for lenders to request payment for a credit report or appraisal. However, legitimate lenders never ask you to pay for processing your application.
Never give your credit card account number, bank account information, or Social Security number over the telephone or Internet unless you are familiar with the company and know why the information is necessary.
If you don't have the offer in hand - or confirmed in writing - and you are asked to pay, don't do it. It's fraud and it's against the law.
If you think you've been a victim of an advance fee loan, contact your BBB or state Attorney General.