#pay advance loans
Advance-Fee Loan Scams
The Attorney General provides Consumer Alerts to inform the public of unfair, misleading, or deceptive business practices, and to provide information and guidance on other issues of concern. Consumer Alerts are not legal advice, legal authority, or a binding legal opinion from the Department of Attorney General.
ADVANCE-FEE LOAN SCAMS
Advance-fee loan or credit card scams are often targeted at people with bad credit. The scam may start as a legitimate appearing website offering online lending services or an ad in the newspaper: “Bad credit no problem — loans available by applying online or calling 1-###-###-####.” The consumer is soon told, “You are qualified, but you must send a fee to process your application/pay a security deposit/pay for insurance.” The victim pays the money, and no loan or credit card is issued. If you re asked to pay a fee for the promise of a loan or credit card, especially to a “lender” who isn t interested in your credit history, you can count on the fact that you re dealing with a scam artist.
RECOGNIZING THE SCAM
The websites and ads offer easy access to loans, regardless of credit history. The advance-fee scammer may use a false business name and address, often with toll-free 800, 866, or 877 phone number that is difficult to trace or rings into Canada. Sometimes the scammer s website or ad will even use a legitimate company s name or physical office address. A fancy website or an ad in a recognized media outlet does not guarantee that the company is trustworthy.
Consumers responding to such websites or ads are taken through a phony application process and later may even receive fake loan approval documents. In order to receive the approved loan, applicants are directed to pay money up-front, under the guise of an application fee, a security deposit, for credit insurance, or some other fee. Often, the applicant is directed to send the payment via wired money transfer, payable to an individual rather than a business.
Consumers filing complaints with the Michigan Attorney General s Consumer Protection Division have been directed to wire payments to Canadian addresses. After sending payment, the loan is never received, and refund attempts are futile.
Making matters worse, some scammers have used the information collected from advance-fee loan victims to commit identity theft.
PROTECT YOURSELF: TIPS TO AVOID ADVANCE-FEE LOAN SCAMS
Don t pay for the promise of a loan . While legitimate lenders may charge you a small amount to process your application and cover the cost of checking your credit, the fees generally are taken from the amount borrowed. Legitimate offers of credit do not require an up-front payment.
Ignore any website offer, newspaper ad, or caller, that guarantees a loan in exchange for an up-front fee . Legitimate lenders never guarantee that you will receive a loan before you apply or before they have checked out your credit status or contacted your references, especially if you have bad credit or no credit record. Be wary of anyone who tells you that they can provide loan approval by reviewing information you give over the phone without a credit check or who says you qualify for a loan at a competitive rate regardless of your credit history.
Thoroughly investigate loan offers from unfamiliar companies. Ask for the company s physical location. Verify if the location actually exists by checking with the U.S. Postal Department, entering the address online at https://tools.usps.com/go/ZipLookupAction_input. Check the company s number and physical location in the phone book or from directory assistance, and call it to make sure that you are dealing with the company you think you are. Check the lender out with the Better Business Bureau. Check out questionable ads and Web site offers by calling Project Phonebusters in Canada toll-free at 1-888-495-8501, particularly if any payment or other communication to a Canadian location is requested. The Attorney General s office also may have helpful information.
Don t wire money or send money orders for a loan . You have little recourse if there s a problem with a wire transaction. Legitimate lenders don t pressure you to wire funds. Refuse to do business with anyone who encourages you to send money or act immediately.
Don t make payment to an individual for a loan . No legitimate lending institution would make such a request.
Steer clear of advance-fee offers that promise a credit card with a pre-approved limit and low interest rates for a fee . To pay the fee, you will be asked to give your bank account information and authorize an electronic draft to pay the fee. In most cases, the credit card never materializes, and the consumer s bank account is quickly drained.
FILE A COMPLAINT
Consumers who fall victim to an advance payment loan or credit card scam should contact the media source that advertised the bogus offer. Responsible advertisers will terminate these ads and contact law enforcement. Since most advance-fee loan scams involve a victim in one state and a scam artist in another, reporting the problem to the Federal Trade Commission is wise: online at www.ftc.gov or by phone, toll-free 877-FTC-HELP (1-877-382-4357).
Consumers may also contact the Attorney General s Consumer Protection Division at:
Consumer Protection Division