What Are Advance Fee Loan Scams

What Are Advance Fee Loan Scams

What Are Advance Fee Loan Scams?
These scams often target consumers with bad credit problems or​ those with no credit .​
In exchange for an​ up-front fee,​ these companies guarantee that applicants will get the​ credit they want — usually a​ credit card or​ a​ personal loan.
The up-front fee may be as​ high as​ several hundred dollars .​
Resist the​ temptation to​ follow up on​ advance-fee loan guarantees .​
They may be illegal .​
Many legitimate creditors offer extensions of​ credit,​ such as​ credit cards,​ loans,​ and mortgages through telemarketing,​ and require an​ application fee or​ appraisal fee in​ advance .​
But legitimate creditors never guarantee in​ advance that you'll get the​ loan .​
Under the​ federal Telemarketing Sales Rule,​ a​ seller or​ telemarketer who guarantees or​ represents a​ high likelihood of​ your getting a​ loan or​ some other extension of​ credit may not ask for or​ receive payment until you've received the​ loan.
Recognizing an​ advance fee loan scam
Ads for advance-fee loans often appear in​ the​ classified ad section of​ local and national newspapers and magazines .​
They also may appear in​ mailings,​ radio spots,​ and on​ local cable stations .​
Often,​ these ads feature 900 numbers,​ which result in​ charges on​ your phone bill .​
In addition,​ these companies often use delivery systems other than the​ U.S .​
Postal Service,​ such as​ overnight or​ courier services,​ to​ avoid detection and prosecution by postal authorities.
It's not hard to​ confuse a​ legitimate credit offer with an​ advance-fee loan scam .​
An offer for credit from a​ bank,​ savings and loan,​ or​ mortgage broker generally requires your verbal or​ written acceptance of​ the​ loan or​ credit offer .​
The offer usually is​ subject to​ a​ check of​ your credit report after you​ apply to​ make sure you​ meet their credit standards .​
Usually,​ you​ are not required to​ pay a​ fee to​ get the​ credit.
Hang up on​ anyone who calls you​ on​ the​ phone and says they can guarantee you​ will get a​ loan if​ you​ pay in​ advance .​
It's against the​ law.
Protecting Yourself
Here are some tips to​ keep in​ mind before you​ respond to​ ads that promise easy credit,​ regardless of​ your credit history:
* Most legitimate lenders will not guarantee that you​ will get a​ loan or​ a​ credit card before you​ apply,​ especially if​ you​ have bad credit,​ or​ a​ bankruptcy.
* It is​ an​ accepted and common practice for reputable lenders to​ require payment for a​ credit report or​ appraisal .​
You also may have to​ pay a​ processing or​ application fee.
* Never give your credit card account number,​ bank account information,​ or​ Social Security number out over the​ telephone unless you​ are familiar with the​ company and know why the​ information is​ necessary.

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