Grand Rapids, MI - September 10, 2012
Consumers nationwide continue to be victimized by advance fee loan scams that demand up-front fees for personal loans that are never delivered, the Better Business Bureau (BBB) warns.
Advance-fee loan scams target individuals and small business owners desperate to get a loan and often take the victim for thousands of dollars.
Most people stumble upon the scam online or learn about the bogus loan offer from ads in local publications and online through classified sites. Often, an advance-fee loan scam Web site will be created and taken down within a couple weeks only to be replaced by another operating under a different name and fake business address.
The Web sites look professional and sometimes require the victim to fill out loan application forms that request such information as the victim's bank account and Social Security numbers. Eventually victims are told they are approved for the loan and just need to pay an advance fee - sometimes as much as thousands of dollars - via money order or wire transfer to pay for insurance or collateral. Those who pay never get the promised loan and are sometimes tricked into giving the scammers even more money.
The BBB recommends that consumers shopping for a loan look for the following red flags of an advance-fee loan scam:
• The lender has a bad reputation - or none at all. Most trustworthy lenders have an established track record; be wary if you can't find much information about the lender online. Always check out a lender - or any business - with your BBB.
• The lender is not registered in your state to do business. Check with your state financial or banking regulators.
• The lender asks you to wire money or send a money order before you can receive the loan. You might be told to wire money to another country. Consider this a giant red flag.
• Be wary of applying for online loans through unfamiliar businesses or websites. Many of these online application sites are run by scamers or by people who sell your information to scammers.
• Understand that any business operating by phone and charging insurance or other fees in advance of making a loan is operating illegally.
• Do not do business with anyone who cannot give you an address that you can confirm is legitimate.
• Read any contract carefully and make sure you understand all requirements before entering into any agreement.
• Official-looking loan documents and sophisticated looking websites are easy to copy or fake. Just because a business appears legitimate, doesn't mean it is.
For more information you can trust, visit bbb.org.