Educational Consumer Tips

Advance Fee Loans

Author: Better Business Bureau

The following is general information provided by BBB and is not intended as a report on any specific company.

The BBB has witnessed a national trend of advance fee loan and credit card 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 or credit cards- 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" or "credit card". 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.

Protecting Yourself 
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. 
Always Remember: 
-Just because a company advertises in a recognized media outlet does not mean the company is 100% legitimate. 
-Legitimate lenders never "guarantee" to get you a loan or credit card before you apply, especially if you have bad credit, no credit, or have declared bankruptcy in the past. 
-Legitimate lenders never ask you to pay for processing your application. One exception is real estate; it is accepted and normal practice for lenders to request payment for a credit report or appraisal.

-Never give your credit card number, bank account information or Social Security Number out over the telephone or Internet unless you know with whom you are doing business. If you do not have the offer confirmed in writing or in hand and are asked to pay, DO NOT DO IT! It is fraud and it is against the law.

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: 
Better Business Bureau 
(800) 828-5000
The Federal Trade Commission (FTC) 
Consumer Response Center 
600 Pennsylvania Avenue
Washington, DC 20580 
877-FTC-HELP (382-4357) 
Attorney General Consumer Fraud Bureau 

This information is general in nature, and is not a Business Review on any particular company, product or service.