Educational Consumer Tips
An advance fee scheme is any situation in which you are asked to
pay an up-front fee before receiving the promised loan, credit
services, inheritance, sweepstakes, prize, tax overpayment or
other product or service.
The BBB warns consumers who are applying for a loan to keep in
mind that legitimate brokers traditionally deduct their fee from
the loan IF AND WHEN that loan is approved. BBB files show that
many consumers have found it difficult, if not impossible, to
obtain a refund from the broker when they can't arrange a loan.
We have also seen many instances where unscrupulous brokers
disappear without a trace.
Another situation where advance fees seem to surface are
companies offering credit repair services. Recent changes in
the law severly restrict these companies from charging you until
the promised services have been performed. The BBB offers a
general advice report on credit repair which may be useful to
you before engaging the services of this type of company.
The BBB would also like you to be wary of individuals or
companies who may send you a letter , or telephone indicating
that you have an inheritance, you have won a lottery or
sweepstakes or you have a refund coming for tax overpayment. Be
particularly cautious if that letter or call indicates that you
must pay a fee to that individual or company before you can
receive the money or prize. Fraudulent companies use these
types of stories to convince you to send them your money. These
scam artists will say that the advance fee they are requesting
is for taxes, processing, or shipping & handling fees.
Consumers should be aware that if you have to pay anything, you
have not WON a prize, and our experience indicates that most
likely, you will never receive anything of value from that
company. It is also important to note that the government does
not charge a fee to claim a tax refund. It is also a sad truth
that in many cases, by the time you realize that you have been
taken advantage of the company has disappeared.
If you receive this sort of letter or phone call, contact the
BBB immediately to find out if there is any
information available on that company, and don't send any money
before you have investigated the company.