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The Truth About Advance-Fee Loan Scams...
The vast majority of lenders are owned and managed by legitimate
professionals. But fraudulent loan brokers and other individuals
misrepresenting the availability of credit and credit terms
definitely are in business. One of their favorite strategies is the
"advance-fee" loan. That's when they guarantee you'll get a loan or
other type of credit - but you must pay before you apply.
Recognizing An Advance-Fee Loan Scam:
Advertisements that promise loans generally appear in the classified
section of local and national newspapers and magazines, and on the
Internet. They also may appear in radio advertisements, on local
cable stations, and in flyers circulated in neighborhoods, shopping
centers and at military bases. Often, these ads feature "900"
numbers, which result in charges on your phone bill, or toll-free
"800" numbers. Unfortunately, advertising in recognized media
outlets or on the Internet does not guarantee the legitimacy of the
company behind the ad. 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.
Some companies claim they can guarantee you a loan for a fee paid
in advance. The fee may range from $100 to several hundred dollars.
Indeed, small businesses have been charged as much as several
thousand dollars as an advance fee for a loan. Whether you are an
individual consumer or an owner of a small business, the result is
the same: you don't get your money; the con artist does. And once
con artists get your money, they disappear.
Don't confuse a legitimate pre-approved credit offer with a
legitimate pre-qualified offer from mortgage brokers, banks, savings
and loans, and credit unions. A pre-approved offer requires only
your verbal or written acceptance. A pre-qualified offer means
you've been selected to apply. However, you still must go through
the normal application process, and you still can be turned down.
Protecting Yourself:
According to the Telemarketing Sales Rule, if someone guarantees or
suggests that there is a strong chance they can get or arrange a
loan or other form of credit for you, it's against the law to ask
you to pay - or accept payment - for their service until you get
your loan or credit.
Here are some points to keep in mind before you respond to ads
that promise easy credit, regardless of your credit history:
* Legitimate lenders never "guarantee" or say that you are likely to
get a loan or a credit card before you apply, especially if you have
bad credit, no credit, or a bankruptcy.
* If you apply for a real estate loan, it is accepted and common
practice for lenders to request payment for a credit report or
appraisal. However, legitimate lenders never ask you to pay for
processing your application.
* Never give your credit card account number, bank account
information, or Social Security Number over the telephone or
Internet unless you are familiar with the company and know why the
information is necessary.
* If you don't have the offer in hand or confirmed in writing and
you are asked to pay, don't do it. It's fraud and it's against the
law.
If You Are A Victim:
If you think you've been a victim of an advance-fee loan scam,
contact your local consumer protection agency, state Attorney
General or local Better Business Bureau (BBB) to report the company.
Source
= Federal Trade Commission
Consumer Credit Info Index
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