Loan Scams Run Rampant

Advance fee loan scams, rely on the fact that you will get a loan, mortgage or other type of credit with minimum requirements and after paying for it before you apply. In most states, it is illegal that brokers require you to pay any fee before the loan proceeds are disbursed, and all of us know that legit credit offers do not require payments up-front.

Even with this knowledge, scammers have the ability to convince their victims that everything is made under legitimate procedures, and using as an example companies that require their consumers to pay for appraisals, applications or even credit report fees. However, what they do not say is that these companies, usually the lenders, are paid after the application is completed. Never pay a broker for arranging the loan.

To convince people on how "professional" their services are fraudulent lenders advertise almost anywhere. The more they advertise the easier people trust them because when they are seen everywhere it makes people believe they are backed up by a solid company. In fact, many scammers pay for radio and TV announcements to get more credibility. Otherwise, you may see their services announced on shopping services and community centers.

A more refined type of advance fee loan fraudsters use 900 numbers, going step by step in the procedures with additional support and feedback provided, in order to charge your phone bill with hundreds and even thousands of dollars. On the other hand, many scammers have toll-fee 800 numbers giving people confidence, in the belief that not charging for a call is a guarantee they will not steal their money.

Consumers must be aware that an advertisement or phone number does not give those fraudulent lenders any recognition, disregard the important of the media used to promote their activities. Moreover, a few of them stick to the U.S. Postal Service, but more "advanced" scammers probably will use overnight courier services and other delivery systems to avoid detection and prosecution by postal authorities.

In fact, many fraudulent advance fee loan companies prefer phone calls to contact their victims, and most of them operate outside the United States, so once again they have a way to avoid all legal action. However, they look like legitimate American companies using a P.O. box rental service, or similar solution, to have a U.S. address.

Most phony scammers are from Canada, but with a list of prospective American victims, their targeted consumers. The Federal Trade Commission (FTC) considers this cross-border fraud as the fastest growing fraud-related problem, receiving for this issue thousands of complaints each year.

Payment asked for fraudsters range from $100 to several hundred dollars. Thousands of dollars are charged as advance fee loans, to starting small businesses unable to get credit otherwise. No matter, if you are an individual consumer or the owner of a small business or organization, scammers will get your money but you will get none, while they disappear out of your life.

To protect your money, never accept an arrangement that "guarantees" a loan after paying a fee in advance. If you really need someone’s help to get the loan and you agree to pay for it, wait until you get the loan before making any payments. The only exception is when you apply to get a real estate loan, and lenders request money in advance for an appraisal or credit report, but they should never ask you to pay for processing an application.

Other information and useful resources:
Tips for Advance Fee Loans, From the Internet Fraud Watch Mortgage Loan Scams From LendersMark.orgFederal Trade Commission - FTC
The Truth About Advance-Fee Loan Scams Federal Trade Commission - FTC