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Loan
Scams
Advance-fee loan scams are claiming countless
victims every year. The companies request advance fees
from customers while promising loans to be paid out
at later times. These fraudulent companies often lure
the customer into doing business with them by impersonating
legitimate institutions and laying out bogus offers.
Since there are many financial loan institutions it
is hard to tell which ones are legitimate and which
ones are scam companies waiting to take your money.
There are a few easy ways to recognize advance-fee loan sharks.
Most illegitimate companies advertise
their loan offers in the classified sections of local
newspapers, magazines as well as on the internet. Often
the ads feature 900 numbers which charge the customer
to even inquire about to company. Others offer toll
free 800 numbers or even area codes from Canada, for
instance 647,905, or 416. Sometimes loan ads are promoted
on radio and television stations also and just because
the advertisement is placed on a legitimate media outlet
does not mean it is a legitimate company.
These advance-fee companies claim that
they can guarantee you a loan for a fee paid in advance.
Fees range anywhere from under one hundred to several
hundred dollars. Legitimate loan companies would never
ask for fees in advances, however, sometimes they do
require processing fees that are usually deducted from
the actual loan amount. With the fraud companies they
will often get personal information, like social security
number, income statistics, or even checking out numbers
on the first phone conversation. The phone operators
then ask the customer to call back in fifteen to thirty
minutes so that they can verify credit. When the consumer
returns a call to the loan shark they are greeted with
an approval. These verbal approvals come with the stipulation
that fees must be paid in advance, mostly in the form
of a credit card or money order. The borrower is then
told to wait a week or more until paper work as been
drafted and loan fees have been verified, then they
will get approval in the mail. If for some reason the
borrower is later denied, fees are promised to be returned.
Often after a couple of weeks customers
get some form of denial through the mail and no returned
fees. If the fraudulent advance-fee loan company have
not already moved locations and changed numbers they
will try to stall the borrower when he or she inquires
about their non returned fee payments. Most of the time
these illegitimate companies do not keep one number
or location very long, in some cases even moving operations
from state to state. This leaves the customer who needed
the loan in the first place even more in debt and cheated.
Here are some helpful tips to help you
avoid advance-fee loan scams.
- Ignore ads or telemarketers that guarantee a loan
in exchange for an advance fee. It’s against
the law for a company to ask you for or accept advanced
payments for services until you receive the loan.
- Most legitimate lenders never guarantee that you
will get a loan or a credit card before you apply.
- Never give out your credit card, bank account,
or social security number over the phone, internet
or fax, unless you are completely sure of the legitimacy
of the company.
- Never trust or make fee payments on a mere verbal
contract or agreement, always verify in writing first.
- If you are uncertain of the company you are dealing
with get their number from a directory and call to
make sure it is in fact the companies whose name is
being used in the ad.
- Never make payments through western union or other
similar companies because you have little recourses
id there is a transaction problem, also never make
payments out to an individual, no legitimate company
would ask you to.
If there is any question to the legitimacy
of a company or if you believe you have been the victim
of fraud you can contact the Federal Trade Commission
(FTC) online at www.ftc.gov or be telephone, 1-877-382-4357.
Canadian residents should
call 1-888-495-8501.
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