AMARILLO, TEXAS -- The Better Business Bureau has a warning for consumers. They say they are seeing a rise in calls about advance fee loans. Victims report losing thousands of dollars to this scam. The scammers promise loans to anyone, regardless of the person's previous credit history.
Callers say they used Internet search engines to locate lenders that "guaranteed" low-interest rate loans for people with bad credit histories. After submitting the online loan application, they were contacted by a company "representative" who said they were approved.
Here's the catch, before they can receive their loan funds, they must first pay a fee. The loan applicant is told to wire the money or send a money order. The promised loan is never received and victims cannot get their money back. They also risk having their identity stolen if they provided their social security number of bank account number.
Janna Kiehl, BBB CEO, says when people need loans and they've been turned down by a financial institution they often turn to the internet.
. "Ask yourself, if someone you know turns you down for a loan, why would a company that doesn't know a thing about you be willing to lend you money?" The answer is they're not. It's a rip off. All they want is that upfront fee and they don't care what you have to go through to get it to them. Don't do it - you'll regret it. And you'll be that much more broke! "Once you send that money, little can be done to recover it." said Kiehl.
Advance fee loan scams are illegal in the U.S. and Canada. To avoid being detected by the law, these false loan operators move quickly, frequently reopening under new names.
If you have trouble qualifying for a loan, you do have options. There are nonprofit organizations in every state with trained credit counselors who can assist individuals with debt problems. Contact the BBB for tips on selecting a trustworthy credit counselor.
BBB Do's and Don'ts to Avoid Bogus Loan Web Sites
· DO NOT use online search terms like "bad credit loans" or "guaranteed loans" that may lead you to fraudulent sites.
· DO NOT wire money or send a money order to secure a personal loan. Legitimate offers of credit DO NOT require an up-front payment of a fee for collateral, processing, insurance, taxes or any other purpose.
· DO NOT do business with lenders that "guarantee" a loan before you apply.
· DO NOT do business with Web sites that refuse to provide a street address and a working telephone number.
· DO go to www.bbb.org to check on a company. Or call the BBB, staff can tell you of any complaints and can visit the business location and conduct other research to verify a site's legitimacy.
· If the site has a BBB seal, DO click on it to check the BBB's report.
· If you are victimized by an advance fee lender, DO file a complaint with the BBB. While the chance of recovering the payment fee is minimal, your experience will help BBBs warn other consumers and assist government investigations.
