What is an advance fee loan scam?

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What is an advance fee loan scam?

Do you need to borrow money to pay for car repairs, consolidate credit card debt, or pay off your mortgage? In an advance fee loan scam, scammers promise to get you a loan, credit card, or access to credit. Or they say they’ll put you in touch with a lender who can almost certainly get you those things. Without considering your credit history. But they say that, first, you must pay in advance. The scammer may say the money is to pay a “processing” fee, “insurance,” “application,” or something else. But it’s a lie. There is no loan or lender. And if you pay, the scammer and his money will be gone.

Advance-fee loan scams target people with poor or poor credit or who are having trouble getting a loan for other reasons. Scammers post ads, often online, or call people to offer these supposedly convenient deals. Many of these scammers buy lists of names of people who have searched for or applied for payday loans or other loans online.

This is what you need to know:

  • Legitimate lenders will not promise you a loan or other credit without knowing your credit history, nor will they require you to pay them first.
  • Real lenders may ask you to pay an application or appraisal fee before they will consider your loan application.
  • But no one who operates legitimately will tell you that paying a fee will guarantee you a loan.

Warning Signs of an Advance Fee Loan Scam

Here are some signs of a possible advance fee loan scam:

  • Scammers post ads that say you can get credit regardless of your credit history. They may say things like, “Do you have credit problems? No problem.” “No hassle: guaranteed”, or “We don’t care about your past. You deserve a loan!” Banks and other legitimate lenders will not promise or guarantee a loan or credit to you before you apply. They will first review your credit report and confirm the information on your application, and before making a firm credit offer, they will consider whether you are able to repay the loan.
  • Scammers don’t disclose charges before you apply for a loan. Fraudulent lenders may claim to have approved you for a loan. But then they tell you that you have to pay before you can get the money. It is a scam. Any upfront fee the lender wants to charge you before giving you the loan is a cue to walk away, especially if they tell you it’s an “insurance,” “processing,” or just “paperwork” fee.
  • Scammers call to offer loans or other types of credit. But it’s illegal for telemarketers to promise you a loan or other credit and ask you to pay a fee before giving you the loan. This is established by the Telemarketing Sales Rule.

protect yourself

Do you have doubts that you are talking to a legitimate lender? The following steps can help protect you from scammers.

  • Find out if the lender is registered in your state. Providers must register with the state in which they operate. Contact your state attorney general’s office or banking or financial services regulator to find out if a provider is registered.
  • Search on the internet. Enter the company name into a search engine along with words like “review”, “complaint” or “scam”; if you search in Spanish, add words like “comment”, “comment”, or “scam”. You can also do a search by entering phone numbers to see if other people have reported those numbers in connection with a scam.
  • Hang up the phone to pre-recorded robocalls. If you answer the phone and hear a recording of a sales pitch, hang up the phone and report the call to the FTC. These calls are illegal. Do not press 1, 2, or any other number to have your name removed from a call list or to speak to a person. Doing so will only receive more calls.
  • Don’t pay for a promise. If someone asks you to pay them upfront in exchange for a credit card, loan offer, debt relief, mortgage assistance, or a job, turn around and walk away. Nobody legitimately trading will ever ask you to pay for a promise. If they do, it is more than likely a scam.
  • Seek help to deal with your debts. You may have more options than you think. There are nonprofit organizations in every state that offer credit counseling services, and they often provide services for free or at a low cost. Find out more about other possible options to deal with your debts.

What to do if you paid a scammer

Scammers often ask for payment methods that will hinder your chances of getting your money back. Regardless of how you paid a scammer, it’s best to act as soon as possible. See more information on how to get your money back.

By Master James

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