What Is The Truth About Advance Fee Loan Scams



What is​ the​ Truth About Advance-Fee Loan Scams?
Advance-fee loan sharks are preying on​ unwary consumers,​ taking their money for the​ promise of​ a​ loan or​ credit,​ and leaving them in​ hot water .​
The scam artists often impersonate legitimate lenders to​ entice consumers into falling for their bogus offer.
According to​ law enforcement agencies in​ the​ U.S .​
and Canada,​ ads and promotions for advance-fee loans suggest — or​ even guarantee — that there’s a​ high likelihood that a​ loan will be approved,​ regardless of​ the​ applicant’s credit history .​
But to​ take advantage of​ the​ offer,​ the​ consumer has to​ pay a​ fee .​
What is​ the​ catch? the​ scam artist takes off with your fee,​ and the​ loan never materializes.
Many advance-fee loans are promoted in​ the​ classified sections of​ daily and weekly newspapers and magazines .​
Often,​ the​ ads feature toll-free 800,​ 866,​ or​ 877 numbers,​ or​ area codes from Canada,​ such as​ 416,​ 647,​ 905,​ or​ 705 .​
The loans also are promoted through direct mail,​ radio,​ and cable TV spots .​
The fact that an​ ad is​ in​ a​ legitimate media outlet — like the​ local newspaper or​ radio station — doesn’t guarantee that the​ company placing it​ is​ trustworthy.
Legitimate offers of​ credit do not require an​ up-front payment .​
Although legitimate lenders may charge application,​ appraisal,​ or​ credit report fees,​ the​ fees generally are taken from the​ amount borrowed .​
And the​ fees usually are paid to​ the​ lender or​ broker after the​ loan is​ approved .​
Legitimate lenders may guarantee firm offers of​ credit to​ credit-worthy consumers,​ but first,​ they evaluate the​ consumer’s creditworthiness and confirm the​ information in​ the​ application .​
Canadian law enforcers caution that it​ is​ highly unlikely that legitimate Canadian lenders would take a​ risk on​ U.S .​
citizens whose credit problems preclude them from getting a​ loan in​ the​ U.S.
Often,​ advance-fee loan sharks claim that their fees will go to​ a​ third party for credit insurance or​ a​ related service .​
Sometimes,​ they even fax materials using stolen or​ forged logos and letterheads from legitimate companies .​
The materials are fakes,​ according to​ enforcement officials,​ and the​ contracts the​ scam artists ask consumers to​ sign are worthless .​
Adding insult to​ injury,​ some scammers have used the​ information they collect from consumers to​ commit identity theft.
Often,​ advance-fee loan scammers direct applicants to​ send the​ fees via Western Union money transfers payable to​ an​ individual,​ rather than a​ business .​
They ask applicants to​ use a​ password code with their Western Union payment,​ which allows the​ scammers to​ hide their identity.
U.S .​
and Canadian law enforcers say consumers can avoid being taken by advance-fee loan sharks .​
Here’s how:
Don’t pay for the​ promise of​ a​ loan .​
It’s illegal for companies doing business by phone in​ the​ U.S .​
to​ promise you​ a​ loan and ask you​ to​ pay for it​ before they deliver .​
Requiring advance fees for loans also is​ illegal in​ Canada .​
Ignore any ad — or​ hang up on​ any caller — that guarantees a​ loan in​ exchange for a​ fee in​ advance .​
Remember that legitimate lenders never guarantee or​ say that you​ will receive a​ loan before you​ apply or​ before they have checked out your credit status or​ contacted your references,​ especially if​ you​ have bad credit or​ no credit record .​
Don’t give your credit card,​ bank account,​ or​ Social Security number on​ the​ telephone,​ by fax,​ or​ via the​ Internet unless you​ are familiar with the​ company and know why the​ information is​ necessary .​
Don’t make a​ payment to​ an​ individual for a​ loan; no legitimate lending organization would make such a​ request .​
Don’t wire money or​ send money orders for a​ loan through Western Union or​ similar companies .​
You have little recourse if​ there’s a​ problem with a​ wire transaction .​
Legitimate lenders don’t pressure you​ to​ wire funds .​
If you​ are not absolutely sure who you​ are dealing with,​ get the​ company’s number in​ the​ phone book or​ from directory assistance,​ and call it​ to​ make sure you’re dealing with the​ company you​ think you​ are .​
Some scam artists have pretended to​ be the​ Better Business Bureau or​ another legitimate organization.





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