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Advance-Fee Loan "Sharks" ...
A different breed of "loan shark" is preying on unwary consumers
by taking their money for the promise of a loan, credit card or
other extension of credit.
Advertisements and promotions for advance-fee loans "guarantee"
or suggest that there's a high likelihood of success that the loan
will be awarded, regardless of the applicant's credit history. But,
to take advantage of the offer, the consumer first has to pay a fee.
And that's the catch: The consumer pays the fee, the scam artist
takes off with the money, and the loan never materializes.
Legitimate guaranteed offers of credit do not require payments up
front. Legitimate lenders may require consumers to pay application,
appraisal or credit report fees, but these fees seldom are required
before the lender is identified and the application completed. In
addition, the fees generally are paid to the lender, not to the
broker or arranger of the "guaranteed" loan.
Legitimate lenders may guarantee firm offers of credit to
credit-worthy consumers, but they rarely do this before evaluating a
consumer's creditworthiness.
Advertisements for advance-fee loans generally appear in the
classified section of daily and weekly newspapers and magazines.
Often, the ads feature "900" numbers, which result in charges on
your phone bill. Advance-fee loans also are promoted through direct
mail and radio and cable TV spots. The appearance of ads in media
outlets that you recognize - like your local newspaper or radio
station - is no guarantee of the legitimacy of the company behind
the ad.
The Federal Trade Commission says you can avoid being bitten by
advance-fee loan sharks: Here's how:
* Don't pay for a promise. It's illegal for companies doing
business by phone to promise you a loan and ask you to pay for it
before they deliver.
*Ignore any ad - or hang up on any caller - that guarantees a loan
in exchange for an advance fee. Legitimate lenders never "guarantee"
or say that you will receive a loan before you apply, especially if
you have bad credit or no credit record.
*Never give your credit card or bank account numbers, or Social
Security Number, over the telephone unless you are familiar with the
company and know why the information is necessary.
Source
= Federal Trade Commission
Consumer Credit Info Index
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