Loan fraud warning signs:
- Be especially wary of unsolicited calls, e-mails or letters offering you a
- Calls about a delinquent debt from unknown numbers, claiming to represent a collection agency or cash advance company (especially if you know you have no such delinquency).
- Requests for money to be sent in advance to cover "processing", "application", "insurance", or the "first
month's payment" are a red flag of loan scams. Legitimate lenders NEVER ask for these things to be paid before a loan is disbursed.
- Once you fall for a loan scam, the greedy thieves may ask for even more money
by telling that the original amount was erroneous, insufficient upon a second look at your credit, or that you will need to send payment for a second company to complete the loan
- Requests that you "wire" or "send" money, as soon
as possible to a large U.S. city or to another country, such as Canada,
England, or Nigeria, by Western Union, Moneygram, or similar means.
- Do not respond to loan solicitations in classified ads. Lenders do not post classifieds!
- Do not respond to solicitations by persons using free email accounts.
- Beware of offers that you encounter on social media (Facebook, Twitter, etc). Ensure that you land directly on the real organization's webpage -- not an imposter's (for example, if the link tells you that it's "Capital One" then your final destination after the click should be the Capital One website).
Four quick tips to avoid scams:
- Know the warning signs listed above
- Watch the video above about wiring scams.
- Check a website's reputation using sources such as ripoffreport.com.
- Read more about internet fraud from the FBI
Have you have been scammed? Do the following:
- Report it to the Federal Trade Commission
- Also, report it to the Internet Crime Complaint Center
- Contact your local police (but don't automatically assume the company name and address on your documents are legitimate. Remember, the scammers use fake addresses, those of REAL companies, or random residential addresses far away, in order to hide their operation)
- File fraud alerts with each of the three credit bureaus. This is necessary because the scammers typically obtain your sensitive information, such as your Social Security Number and information on your driver's license. They can use this to obtain credit in your name. Visit TransUnion.com, Experian.com, and Equifax.com to begin this process..
Fee Loan Scam Artists Find Their Victims
may be on their list. If you have applied for loans lately, you
can be assured that your need for financial assistance has been
made known to others besides the company to which you have applied.
Often, such consumer information is sold by the credit reporting
agencies, passing into hands far and wide. This practice makes
it easy for unscrupulous companies to find potential victims for
scams like advance fee loans. Be wary of unsolicited offers promising
guaranteed loan approval made by mail, phone, or email, especially
if personal information is requested. Never give out any personal
information, such as your social security or bank account numbers,
unless it is to a trusted company with which you have initiated
In other cases, the consumer may
come across an advertisement that offers loans, often assuring
the reader that poor credit or no credit is not a problem. Commonly
appearing in classified sections of newspapers or posted on the
Internet, these ads are often placed in very reputable publications
or on respected web sites in an attempt to lend credibility to
their claims. Others have used the names and logos of well-established
financial institutions, counterfeiting their ads but inserting
their own contact information, leading the consumer to believe
they have placed a call to a legitimate lender.
Typical Advance Fee Loan Scheme
are many variations of personal loan scams, but the
basic steps remain the same in most of these schemes. First,
the consumer is assured that they have qualified for an
unsecured loan, usually for a large sum of money. Often,
these consumers will be sent authentic looking documents
and loan contracts to convince them that this is indeed
a legitimate offer. Many times, these documents are embossed
with fraudulent logos and names stolen from reputable lenders,
helping to convince the consumer that this company can
Correspondence from the scammers, including calls, emails, contracts, and letterhead, may seem very professional. This is meant
to smooth away any suspicions the target of this scam
may be feeling, part of the manipulation these predators
practice so skillfully.
the consumer is told that due to the amount of the
loan or their questionable credit rating, a deposit
is needed. This up front payment is often explained
away as a down payment, insurance premium, or processing
fee and can range from several hundred dollars to
several thousand. Generally, the scammers will then
instruct the consumer to send the deposit through
Western Union or Moneygram, and fax applications
complete with personal and financial information
to them, with the assurance that they will receive
their loan very quickly after these steps are taken.
Of course, the consumer receives nothing, while the
scammer disappears with both the deposit and all
the information needed for identity theft.
of these fraudulent advance fee loan companies
will make repeated demands for money from their
victims, convincing them that upon looking up a
current credit report, their ratings require a
larger deposit than was first quoted. Another common
excuse is that the original lender has backed out,
but for a larger fee, they can secure another loan for
the consumer. With these tactics and others, scammers
have often convinced consumers to send substantial
sums of money three or four times before they realize
they have been victimized.
by the time the consumer has given up on receiving
the funds they expected, coming to the realization
they have been scammed, the perpetrators have
disappeared. The toll free numbers provided are
disconnected or are answered by a recording or
machine, the operation probably moved to a new
location to stay one step ahead of the law and
groom a new batch of potential victims.
legitimate company will ask for funds in advance
of a loan, nor will it ask for any fee to be
wired to them directly by Western Union, Moneygram,
or any other wire service. Fees incurred in
a legitimate loan generally are deducted before
the funds are dispersed. These requests should
be a clear warning to the consumer, as should
any loan company that is pressing you for an
instant decision on their offer.
to Do if You Have Fallen Prey to Advance
Fee Loan Fraud
this crime is essential. Many are ashamed
to admit that they have been conned by
such schemes, failing to report the fraud
due to embarrassment. Those that do not
make these crimes known leave the door
open for these predators to strike again.
While reporting such crimes does not
always assure that the scam artist is
caught, it does raise awareness of these
schemes, shrinking their pool of potential
a complaint with the Federal Trade
Commission can be done online in approximately
ten minutes. This small investment of
your time can help towards shutting these
operations down before they victimize
scores of other unsuspecting consumers.
these criminals have collected your personal
identifying information, identity
theft is a serious risk. With access
to information from your social security
card, driver’s license, pay stubs,
and bank statements, stealing
your identity will be quite easy,
allowing these scammers to use your
credit for their own purposes. Thousands
in debt could be run up in your name
in a very short period. Checking your
credit report every three months to
monitor for fraudulent activity is
a good idea under such circumstances.
If there is a problem, file formal
disputes with each credit bureau.
Disclaimer: We have built this resource with great care and expertise. We try to keep the articles current and up-to-date, but this isn't always possible given the ever-changing financial and lending markets. As such, DirectLendingSolutions.com provides no guarantees, and NO WARRANTY, expressed or implied, for the accuracy of any information provided, or its applicability to your financial situation. We strongly suggest that you consult your own financial advisor to determine the best course of action for your financial situation.