Advance Fee Loan Scams on the Rise

Allison Tussey —  January 5, 2015 — 1 Comment

Consumers are being warned concerning the recent frequency of advance fee loan scams. While advertisements guaranteeing loans can be tempting and the websites associated with these scams often look legitimate, they can be very misleading.

The scam starts when a consumer is told that they qualify for a loan or credit card, but must pay a fee, security deposit or insurance to process their application. Scammers commonly direct the victims to pay the advance fees using a reloadable debit card, such as the top-selling, legitimate Green Dot cards. Once you pay the fee, the scammer walks away with your money, leaving you without a loan.

Many companies involved in this type of scam are not licensed to do business. Consumers usually complete a phony application process and may receive fake loan approval documents. In some cases, the companies falsify addresses and use a name that is similar to the name of a legitimate company.

To avoid becoming a victim, we urge consumers to follow these tips:

Verify the lender license;

Don’t pay for the promise of a loan. It is illegal for a loan broker to charge any fees in advance of a loan closing. Licensed lenders rarely require the payment of advance fees in order to secure a loan;

Question any fees. You may be asked to pay processing and application fees or the first month’s payment. If you are you are assessed a fee prior to closing, and you’re not dealing with a licensed lender, you may be the victim of advance fee loan fraud. Ask the lender if they are a licensed financial services provider in your state;

Get the agreement in writing. Ask the lender to detail in writing specifically why the fee is being assessed. What service is the lender or broker claiming to provide in exchange for the funds? If you’re dealing with a loan broker and paying an advance fee to receive the loan, chances are it’s a scam; and

Be wary of companies that advertise “No Credit Check” or “Guaranteed Loans.” No loan is ever guaranteed.

The Florida Office of Financial Regulation issued the warning.

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Allison Tussey

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One response to Advance Fee Loan Scams on the Rise

  1. Kennedy Funding is scum. The will do anything to get your money if you put it into escrow. If your instructions lock up your money, think again. They will submit different instructions and you will be tied up in court or they will just steal your money. Don’t do it!!!

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