How to Avoid Advance-Fee Loan Scams
Many people are tempted by quick money fixes and fast, cheap loans. These scams often target consumers with bad credit problems or those with no credit. In exchange for an up-front fee, these companies "guarantee" that applicants will get the credit they want — usually a credit card or a personal loan. Because military families are often faced with financial burdens not placed on other families, they can sometimes fall victim to these frauds in attempts to make payments for children, necessities and other expenditures.
MilitaryConnection.com hopes the following information will help military families distinguish wrongful lenders from trustworthy ones.
The up-front fee may be as high as several hundred dollars. Resist the temptation to follow up on advance-fee loan guarantees as they may be illegal. Many legitimate creditors offer extensions of credit, such as credit cards, loans, and mortgages through telemarketing, and require an application fee or appraisal fee in advance. But legitimate creditors never guarantee in advance that you'll get the loan.
Under the federal Telemarketing Sales Rule, a seller or telemarketer who guarantees or represents a high likelihood of your getting a loan or some other extension of credit may not ask for or receive payment until you've received the loan.
Recognizing an Advance-Fee Loan Scam
It's not hard to confuse a legitimate credit offer with an advance-fee loan scam. An offer for credit from a bank, savings and loan, or mortgage broker generally requires your verbal or written acceptance of the loan or credit offer. The offer usually is subject to a check of your credit report after you apply to make sure you meet their credit standards. Usually, you are not required to pay a fee to get the credit.
Hang up on anyone who calls you on the phone and says they can guarantee you will get a loan if you pay in advance. It's against the law.
Credit Repair Scams
Do yourself a favor and save some money, too. Don't believe these statements. They're just not true. Only time, a conscientious effort, and a plan for repaying your debt will improve your credit report.
The Warning Signs
You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It's a federal crime to make false statements on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.
The Credit Repair Organizations Act
Your contract must specify:
Where to Complain
Because military families often face financial burdens other families don't, they need to be especially aware of “too-good-to-be-true” scams that ensure great financial results. Knowing how to spot loan scams and what to do if you come across one is important. We constantly update our information to include the most relevant military news. There is something for everyone here and everything is free to users.
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