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Educational Consumer Tips

Loans (Advanced Fee)

Author: Better Business Bureau

This report is general in nature and is not intended as a reliability report on any company, service or product.

Regardless of your current credit status, beware of ads which promise a loan for an up-front fee. The catch? The ‘company’ takes off with your fee, and the loan never materializes.

Loan schemers often advertise 800, 866 or 877 phone numbers in the classified sections of newspapers and on cable television. The fact that an ad is in a legitimate media outlet doesn’t guarantee that the company placing it is trustworthy. These advertisers guarantee loans, but they generally do not actually lend money. Do not be fooled by money back guarantees stating that you will receive a refund of monies paid if you do not receive a loan. Often, advance-fee loan scammers direct applicants to send the fees via Western Union money transfers payable to an individual, rather than a business, which allows hidden identity and the monies cannot be traced or returned.

Do not confuse advance-fee loan offers with legitimate credit grantors that charge processing fees; advance-fee operators cannot guarantee that you will get a loan. Although legitimate lenders may charge application, appraisal, or credit report fees, the fees generally are taken from the amount borrowed. And the fees usually are paid to the lender or broker after the loan is approved.  Understand that it may be impossible to determine whether a business is legitimate from a phone conversation or quick review of promotional materials. Do not act immediately. Do not give out your social security number, bank or credit card information. Take the time to check out the offer before making a move. If the company is pressing you to act quickly, often it is because they do not want you to research anything about them or their practices!

Remember that legitimate lenders never guarantee or say that you will receive a loan before you apply, or before they have checked out your credit status or contacted your references, especially if you have bad credit or no credit record.

If you’ve wired money to a scam artist, call the money transfer company immediately to report the fraud and file a complaint. You can reach the complaint department of MoneyGram at 800-666-3947 or Western Union at 800-448-1492. Ask for the money transfer to be reversed. It’s unlikely to happen, but it’s important to ask. Also file a complaint with the FTC at or call toll-free 877-382-4357.

Check with the BBB for a company's reliability report prior to doing business. For more advice you can trust from your local BBB on avoiding scams and fraud, go to

Updated 7/2012