ADVANCE FEE LOAN SCAMS
Loans that require an advance fee in order to achieve financing typically prey
on the weakest members of society. These dishonest companies usually guarantee
large unsecured personal loans to individuals that are not able to achieve
approval for a loan via conventional lending institutions (banks, credit unions,
etc.) or go after those with minimal financial knowledge. Equipped with a very
aggressive but smooth pitch and an absolute lack of ethics, these scam artists
typically swindle amounts that vary from a few hundred dollars to several
thousand from unwary applicants. Making the matter even worse, these con-artists
usually obtain enough personal info from their victims opening them up to
The advice below will help you
Signs of a loan scam:
1- Be aware of unsolicited emails, phone calls and/or letters
offering you a guaranteed approval loan.
2- Requirements for advance sending of money to cover the cost/s
of the application, processing, loan insurance or the first
month's premium should be an instant red-flag of a loan scam.
3- Once these thieves have hooked you with you making an advance
payment for your loan, they will often ask for even more money
up-front indicating that the original quoted required
advancement was incorrect, deficient upon a second examination
of your credit, or that there is a second company involved that
is also requiring advance fees in order to finalize your loan
4- Any sort of request for wiring of money via Western Union or
a Moneygram to a non-US country lie Nigeria, Canada, England,
Get more info on
how to spot a loan scam.
How Do Advance Fee Loan Scammers Locate Potential Victims?
If you have applied for any sort of credit, it is very likely
that your information was sold by the credit reporting agencies
to multiple sources. This practice enables corrupt organizations
to locate their victims. Be alert of unsolicited offers by
phone, mail and/or email that guarantee loan approval. You
should never disclose any personal information including but not
limited to bank account info or your Social Security Number to
anyone unless you are 100% certain that the company is
legitimate and you have instigated the contact.
It is also very common for consumers to come across a classified
ad or a website commonly placed on very reputable distribution
channels, offering loans for people with bad credit and no
credit. Some scammers will even use the logos of reputable
lenders in their ads but insert their own contact info, tricking
consumers into thinking that they are contacting legitimate
How Does the
Personal Loan Scams Work?
There are several different variations of this type of
advance fee loan scam. However, the fundamental steps are all
the same. First, the applicant is guaranteed that they have been
approved for an unsecured personal loan, typically for a very
large amount. Authentic looking loan documents with all sorts
fancy logos and embossed stamps will be sent to these consumers
assuring them that the financier is a legitimate company. Below
is an acceptance letter example we received from one of our
I would like to apologize for the holdup in getting you your
loan agreement documents. We have been having technical issues
with our system. As per our phone conversation, you will find a
copy of the loan commitment attached, reflecting the loan that
we have been able to approve for you.
Please go over the forms, sign and fax back all four pages.
Please do not forget to include your banking information so that
we can directly deposit your funds into your account. In
addition, please do not forget to fax your driver's license as
proof of identification. Please feel free to contact me at any
time with questions. Thank you for your business! We look
forward to getting you the financing that you need!
The above letter may appear to be professional, coming from a
legitimate company, but is merely intended to create a comfort
zone for the consumer and eliminate any fears that they may be
partaking in a scam.
After you fax the required documents, the next step of the scam
is that you will be told that you need to make a deposit as a
down payment for your loan because of your problematic credit
rating. The deposit will be used as an insurance premium, or
processing fee and will range from a few hundred dollars to
several thousand. This deposit is usually required to be sent
via Western Union or a Moneygram.
It is also common for the advance fee loan
scammers to ask for an additional deposit after you send the
first one because your poor credit rating requires an even
larger deposit than initially quoted. Another angle of the scam
is that they will contact the consumer posing as a different
lender, indicating that the first lender has backed out, and
that they will need an additional advanced fee in order to
process the loan.
Typically, once the consumer comes to their senses and realizes
that they have been victimized and that no funds are coming, the
scammers have disappeared. The provided phone numbers are either
disconnected or go straight to an answering machine. The
operation likely also already relocated to a new location and
are on the way to finding their next group of victims.
What Should You Do if You Become a Victim of an Advance Fee
Even though you may be very ashamed and embarrassed it is very
important that you report this crime timely. Not reporting the
crime will continue to enable these predators to continue
ripping people off.
If you have been a victim of an advance fee
loan scam it is very important that you report it to the
agencies below. Please note that the provided company address
and name on your documents are not real. In order to keep their
business secrete, the fraudsters use phony addresses, sometime
those of REAL companies, or some random address belonging to a
residence very far away from their actual operation:
1- Contact all three credit bureaus,
Transunion, and file fraud alerts with each. Doing so will
help prevent yourself from becoming a victim of identity theft
since the scammers will likely be in possession of sensitive
information like your driver's license and/or your Social
Security Number. Get more info on
detecting identity theft.
4- Your local police
PhoneBusters - allows you to report the toll-free numbers
being used if the call originated in Canada
It is also important that you get a
free copy of
your credit scores to make sure that you are not a victim of
identity theft. If you do see signs of being an ID theft victim,
you will need to take the proper steps to
correct your credit report.
Enforcement Listing by Agency and State
Better Business Bureau
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