Loan scam red flags
- Any requests for money to be sent in advance to cover "processing" or "application" fees, "insurance", or the "first month's payment" are a red flag of loan scams. Legitimate companies do not ask for expenses to be paid upfront, but deduct these fees from the total amount of the loan granted.
- The lender is from a different country (or state in the US) from you. Loan firms have to be registered and authorised in any country/state that they are trading. This means that they have to have a physical presence in each one.
- Any mention of using Western Union, Moneygram or Bitcoins to make payments, or to send money to an account in the name of an individual or in a different country.
- While the scam can start when the victim is looking for a loan on the internet and finds a fake loan company website or online advertisement placed by the criminals; it can also begin when you respond to a newspaper ad, unsolicited email, letter or telephone call.
- Loan scammers often use names that sound like legitimate companies, so consumers think they are dealing with a widely known and reputable lending organization. They often use toll-free 1-800- or 1-900- telephone numbers.
- Once contact has been established you are asked to fill out an application and either fax or email it back to the “company”. The application asks for personal information such as your Social Security number and bank account details and often ID.
- You are quickly told that your loan is approved, often with no mention of a credit check. Or you may be told that they have found a company that is willing to handle your loan.
- After you are notified that the loan is approved, you are instructed to pay a fee in order to receive the money. They might say it is an insurance payment, legal expense and/or collateral/processing charge; or, that you need to make a few monthly payments upfront. This is the Advance Fee.
- You are instructed to wire the money to a person through Western Union or Money Gram, or through a bank transfer to a bank account overseas.
- The scammers claim that once the fee is paid the loan amount will be transferred into your bank account or that you will receive a check the next day. Of course, the funds never do get transferred to your account or the check never arrives.
- The scammers then say that another fee/payment is required or that the lending company changed its mind and they will need to find another lending company. Again you are asked to send via a wire transfer.
- If the victim decides to cancel the loan after the advance fee is paid, the scammers usually say that a refund will be made “next month”. A refund never arrives and eventually the telephone number is disconnected and/or the website closes and the victim is left with no way to contact the company.
https://www.consumer.ftc.gov/articles/0 ... -fee-loans
Looking for a loan or credit card but don’t think you’ll qualify? Have you been turned down by a bank because of your poor credit history? You may be tempted by ads and websites that guarantee loans or credit cards, regardless of your credit history. Rule number one: Legitimate 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.