Advance Fee Loan Scams
Consumers who have poor credit and are seeking loans should be careful not to fall victim to an advance fee loan scam.
Perpetrators of this scam run ads or make telemarketing calls in which they offer guaranteed loans regardless of one's credit history. In exchange for a $5,000 or $10,000 loan the consumer is typically asked to wire or send a money order for $500 or more to pay for "processing fees". But since this is a scam, the applicant never receives the loan money. In a variation of this scheme a consumer may actually receive a loan check from the company, however, it turns out to be counterfeit. In either case, the consumer is out the money he paid in fees.
Avoiding this type of scam is simple. Just remember that legitimate lenders should not charge you an up-front fee for a loan. They make their money via the interest you pay on the loan, not through fees. If, however, there is a processing fee involved, the lender should deduct that fee from the loan amount, rather than charging you a separate fee.
Consumers who fall victim to an advance payment loan or credit card scam should contact the media source that advertised the bogus offer. Responsible advertisers will terminate these ads and contact law enforcement. Since most advance-fee loan scams involve a victim in one state and a scam artist in another, reporting the problem to the Federal Trade Commission is wise. They can be reached online at www.ftc.gov or by calling 1-877-FTC-HELP (1-877-382-4357). Consumers may also contact the Governor's Office of Consumer Protection at 404-651-8600 or 800-869-1123.