Tips For Avoiding
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.
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
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
don't have the offer in hand -- or confirmed in writing -- and you're
asked to pay, don't do it. It's fraud and it's against the law.
Truth About Advance-Fee Loan Scams
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.
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.
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.
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.
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.
are some points to keep in mind before you respond to ads that promise
easy credit, regardless of your credit history:
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.
Low-Cost Help for Credit Problems
It's a good idea to try to solve your debt problems with your creditors
as soon as you realize you won't be able to make your payments.
If you can't resolve your credit problems yourself or need additional
help, you may want to contact a credit counseling service. There
are nonprofit organizations in every state that counsel and educate
individuals and families on debt problems, budgeting and using credit
wisely. These organizations work directly with your creditors to
help resolve your debt problems by negotiating a repayment schedule
that is affordable for you and acceptable to the creditor. There
is little or no cost for these services.
military bases, credit unions, and housing authorities also may
offer low- or no-cost credit counseling programs. Check the white
pages of your telephone directory for a service near you.
To learn about your rights under the Telemarketing Sales Rule and
how to protect yourself from fraudulent telephone sales practices,
request a free copy of Straight Talk About Telemarketing. Contact:
Consumer Response Center, Federal Trade Commission, 600 Pennsylvania
Avenue, NW, Washington, DC 20580; toll free, at 1-877-FTC-HELP (382-4357);
organizations have additional information.
Financial Services Association
919 Eighteenth Street, NW
Washington, DC 20006
Association of Consumer Agency Administrators
1010 Vermont Avenue, NW, Suite 514
Washington, DC 20005
Personnel and Family Readiness (PERS-662C3)
5720 Integrity Drive, Building 768
Millington, TN 38055-6620