Up-front processing fees for loan may indicate scam

November 26, 2012 22:37 by Consumer Ed

Dear Consumer Ed: 

I applied for a loan online. I then received a call from business reps from an out-of-state bank telling me that my loan had been approved but that I had to pay a $120 processing fee via Green Dot MoneyPak card. I got the card and gave the number to the business rep, who then asked for $300 for another processing fee. I bought another card and gave them the number.  They then asked me to pay another fee, and I realized I was being scammed.  Is there any way I can get my money back?

Consumer Ed says: 

It is a violation of Georgia’s Fair Business Practices Act for someone engaged in telemarketing to employ a scheme to defraud another person or to commit theft.  If the bank violated the telemarketing laws when they called you about the loan, you may want to consult a lawyer to learn about potential legal claims against the company.  You should also report your situation to the Attorney General’s Office and the Department of Banking & Finance in the State in which the bank is headquartered. They may be able to take action if the bank engaged in illegal activities. 

However, it is important to realize that the representative who called you may not have actually worked for the bank, and that, unfortunately, you may have been the victim of a scam.  In that case, you are very unlikely to recover your lost money since the representative who called you will not be easily traceable.  Regardless of whether or not this was a scam, you should also report your situation to the following government agencies in order to attempt to recover your money and to spread the word about the possibility of a scam:

Another avenue worth exploring is attempting to recover your money from Green Dot MoneyPak.  As the seller of prepaid cards, Green Dot MoneyPak is required to include the terms of use in the packaging that accompanies the cards at the time of purchase, as well as making such terms available upon request.  Green Dot MoneyPak features the following disclosure on its website, moneypak.com:  “Green Dot is not responsible for paying you back. Your MoneyPak is not a bank account. The funds are not insured against loss.”  MoneyPak suggests that its customers treat the money on the MoneyPak like cash—once the MoneyPak is lost, there is no way to trace and recover the money.  If Green Dot did not display the required disclosures clearly and conspicuously, then it may have violated the law.  If the required disclosures accompanied the card at the time you purchased it, then you will likely not be able to recover your money from Green Dot MoneyPak.  You may want to consult an attorney for legal advice. 

While this will not assist you in retrieving your money in this instance, you should take the following steps in the future when attempting to obtain a loan:

  • Don’t pay up front.  Legitimate offers of credit generally do not require an up-front fee. Any fees are taken from the amount borrowed after the loan is approved. 
  • Don’t fall for promises that you’ll get a loan regardless of your credit record.  If you have poor credit or haven’t established a good credit record yet, it’s unlikely that a reputable company will lend you money. 
  • Do business with licensed companies.  Ask Georgia’s Department of Banking and Financing (http://dbf.georgia.gov/general-information) if the lender operating in Georgia has complied with the licensing requirements.  If it has not, then you should not do business with that company.
  • If you can’t get a loan yourself, get a co-signer.  Having a co-signer may allow you to obtain a loan from a reputable lender when you would ordinarily not be able to.  A co-signer, usually a friend or relative, is someone willing to apply with you for a loan.  You and the co-signer would both be equally responsible for the loan payments. 
  • Get all the costs and other details before you decide.  Shop around for the best loan rates and fees.  Research several lenders, and look for consumers’ reviews of the different lenders.
  • Have proof of what you were promised.  Make sure to get the loan agreement in writing or in an electronic form that you can use to document the deal.  You want the deal in writing so you know the precise terms of the agreement and so the lender cannot change the terms after you enter into the loan agreement.


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Payday loan offer - is it a scam?

October 10, 2012 00:32 by Consumer Ed

Dear Consumer Ed: 

I got a call from a man in Washington, D.C. who said he was with a payday loan company, telling me that I had received a loan for $1,000.   He gave me a confirmation number and told me I had to call his senior loan manager in order for the loan to go forward.  He then told me I had to pick the money up at a Western Union.  I declined, but am interested to know if this is legit.

Consumer Ed says: 

Almost certainly it is not.  At best, the phone call is likely just a scheme for the caller to make contact with you in order to sell you a loan or other product; at worst, it is a scam designed to get you to give over personal financial information so that the caller can then steal your money, commit identity theft, or both.

It is very unlikely that you actually have been approved to receive a payday loan because payday loans – indeed, all loans – require some sort of application and credit check, and you did not submit an application or take any other steps to apply for the loan.  What’s more, payday loans are generally illegal in Georgia.  So, a legitimate business would not attempt to contact any Georgia consumer about a payday loan.

According to Georgia law, it is illegal for someone to represent that a person has been selected to receive something when in fact the purpose of the call is really to make contact with prospective clients.  It is also unlawful to represent that a consumer has been “pre-approved” for a loan and then inform the consumer that he or she has to meet additional conditions in order to get the loan.

Another indication that this phone call is not on the up-and-up is the fact that the caller is a stranger, reaching you by phone, and asking you to use Western Union.  As a general rule, you should never give a stranger your bank account information, Social Security number or full name and address over the phone.  The use of Western Union is especially suspicious.  Legitimate lenders will not ask you to use Western Union.  Western Union is really meant for wiring cash quickly, such as to a family member who urgently needs it, but not for use with strangers.  That’s because wiring money is like sending cash; once it is sent, you can’t stop the transfer and get your money back. This makes Western Union quite appealing to scammers who want to take your money and remain anonymous.

The phone call you received may well have been an “Advance-Fee Loan Scam”.   It is likely that after discussing your supposed loan with the “loan manager”, he or she would ask you to pay some kind of up-front fee through Western Union. Remember that if you have to wire money in order to receive a loan or credit card, it’s a scam. 

Some tips you can use to avoid scams like this:

•    Only send money to people you personally know and trust;
•    Never provide your banking information to unknown individuals or businesses‎;
•    Never send money in advance to obtain a loan or credit card

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Is Walmart gift card text message a scam?

August 9, 2012 18:33 by Consumer Ed

Dear Consumer Ed: 

I received a text message that says I won a Walmart gift card. How can I tell if this is legitimate?    

Consumer Ed says: 

It is highly unlikely that the text message you received is legitimate.  This sounds like a version of similar scams involving purported “free” gift cards.  In March, the Better Business Bureau reported a scam in which many people received text messages promising “free” Walmart and Best Buy gift cards.  One such message read, “Walmart $1,000 gift card for the first 1000 users to go to [link] and enter code 2938.”  Another said, “You have been randomly selected for a Best Buy gift.  Get your $1,000 gift card at [link].”  Neither of these offers panned out.

This type of scam is known as “smishing”, a type of “phishing” scam where the scammer sends you a text message, instead of an e-mail.  If you click on the link in the text message, you’ll be required to provide personal information such as your credit card number or social security number before you can claim any gift card.  The scammers then use this information to steal your identity. 

If the link provided in any text (or e-mail) message doesn’t lead you directly to a page on the company’s main website, it’s more likely than not that the offer is a scam.  The most popular website being used in this particular smishing scam, for example, is www.walmartgift.mobi (rather than the store’s actual site, which is www.walmartstores.com). 

Walmart does give away legitimate gift cards to the winners of drawings for receipt surveys, and these drawings take place four times per year.  However, the winners of these gift cards are always notified by certified mail, not via email or text message.

Walmart, along with most other major reliable retailers, will never send you a text, telephone, or e-mail message asking for your personal information. 

Don’t respond to any messages that ask for this kind of personal information.  Also, you should never click on any links provided in the message. The scammers who send these messages are just trying to get your personal information.  Walmart’s current policy is that it never asks consumers, either online or in e-mails, to complete online surveys in order to receive a gift card.  And Walmart will not send you any e-mails or surveys that require you to make a purchase or pay money as a condition for participating.
Anyone receiving this type of text message should report it by forwarding the text message to 7726 (“S-P-A-M”).  You can also report it to the Georgia Department of Law’s Consumer Protection Unit at www.consumer.ga.gov or by calling 404-651-8600 or 1-800-869-1123, and to the Federal Trade Commission (FTC) at www.ftc.gov or by calling 1-877-FTC-HELP.

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