Loan Scams: Beware that offer that regardless of credit history you'll
Is that loan offer for real? Maybe not! Find out below!
Have you received an email or postal letter offering you a debt consolidation
loan, student loan, mortgage, small business loans or a great credit card rate? It
is probably a scam. The offer and their websites may look real, except they will
quickly ask you for personal financial information, social security
number, bank account numbers, in addition to your name, address, phone numbers, etc.
If you are looking for information about
college scholarship, grant and loan
scams, see this page.
Also see these examples of loan scam emails:
- Allen Finance Investments,
Mr. Chukuma Doller
- The Angel Fellowship,
PO Box 3906, Las Vegas, NV 89127
- Capital Investment Solution Company,
Mr John Smith
- Milestone Financial Loan Company,
Mr. Peter Packerson
- Nationwide Alliance Lending,
- Scholarship, Student Loan and Financial Aid scams!
- Sparta Loan Firm,
Rev David Smith
- Wilmer Financial Group,
How do loan scams work?
The scammer sends you an email or letter, or you respond to
an advertisement on tv, radio, newspaper, magazine or online. The ad often
uses the names of large, reputable and well-recognized lenders. To respond to
the advertisement, victims are directed to call a "third-party consultant" who
solicits application information including social security numbers. During this
telephone call, the "loan" is always approved.
The "third-party consultant" then faxes a loan package to the victim, or
directs the victim to a website to enter the information. The
package includes a request for bank account information.
Finally, victims must wire a required advance payment or a deposit through Western
Union or Money Gram to the consultant. The victim never obtains a
loan, and the scammer disappears with the application fees and down payments.
Loan scams are generally a type of advance-fee frauds: with loan sharks are preying on unwary consumers,
taking their money for the promise of a loan or credit, and leaving them in hot
water. The scam artists often impersonate legitimate lenders to entice consumers
into falling for their bogus offer. The scammer will try, generally in this
order, to get you to:
provide your personal information so the scammer
can steal your identity: opening new credit cards in your name and running
up a bill, or selling fake id's with your information on them;
send a check or bank details so they can use it
to make counterfeit checks that the scammers can use in other scams; and
send money (loan application fees, down payments,
According to law enforcement agencies in the U.S. and
Canada, ads and promotions for advance-fee loans suggest - or even "guarantee" -
that "even with a poor credit history" you can get a loan approved. But to take advantage of the offer, the consumer has
to pay a fee. The catch? The scam artist takes off with your fee, and the loan
Often, advance-fee loan sharks claim that their fees will go
to a third party for credit insurance or a related service. Sometimes, they even
fax materials using stolen or forged logos and letterheads from legitimate
companies. The materials are fakes, according to enforcement officials, and the
contracts the scam artists ask consumers to sign are worthless. Adding insult to
injury, some scammers have used the information they collect from consumers to
commit identity theft.
Tips: What you need to know avoid falling for a loan scam:
- NEVER enter your social security number, credit card, bank account
details or any other personal information on websites that contact you vian email,
on the telephone, by fax, or via the Internet unless you are familiar with
the company and know why the information is necessary.
- The links contained in emails can be faked so it is not obvious
that you are being sent to a different website from the real company. For
example, this may look like a link to Disney World,
but if you click on it, you will see that it actually takes you to
Microsoft's website. Often, the websites are set up to look exactly like the
real website, to maintain the scam. Legitimate companies will simply tell
you call or go to their website, without providing a link. You can only be
sure that you are going to the real website by typing the correct url
(website address) into your browser directly, rather than clicking on a
- Legitimate offers of credit do not require an up-front
payment. Don't pay for the promise of a loan. It's illegal for companies doing
business by phone in the U.S. to promise you a loan and ask you to pay for
it before they deliver. Requiring advance fees for loans also is illegal in
Canada. Although legitimate lenders may charge application, appraisal, or
credit report fees, the fees generally are taken from the amount borrowed. And
the fees usually are paid to the lender or broker after the loan is approved.
Legitimate lenders may guarantee firm offers of credit to "credit-worthy"
consumers, but first, they evaluate the consumer's creditworthiness and confirm
the information in the application. Canadian law enforcers caution that it is
highly unlikely that legitimate Canadian lenders would take a risk on U.S.
citizens whose credit problems preclude them from getting a loan in the U.S. Ignore any ad,
or hang up on any caller, that guarantees a loan in
exchange for a fee in advance.
- Western Union or MoneyGram: Often, advance-fee loan scammers direct applicants to send
the fees via Western Union money transfers payable to an individual, rather than
a business. They ask applicants to use a "password code" with their Western
Union payment, which allows the scammers to hide their identity.
- The loans also are promoted through direct mail, radio, and cable TV
spots. Many advance-fee loans are advertised in the classified
sections of newspapers and magazines. Often, the ads use
toll-free 800, 866, or 877 phone numbers, or area codes from Canada, such as 416, 647,
905, or 705. The fact that an ad is in a recognized media outlet, like the local
newspaper or on radio or tv, doesn't mean that the company placing the ad is
legitimate or trustworthy.
- No guarantees that you will be approved! - Remember that legitimate lenders
never guarantee or say that you will
receive a loan before you apply, or before they have checked out your credit
status or contacted your references, especially if you have bad credit or no
- Never send a payment to an individual for a loan; no legitimate lending
organization would make such a request. It should only be to an
organization by company name!
- Don't wire money or send money orders for a loan through Western Union,
or similar companies. Once it is collected on the other end, it is GONE! You have little recourse if there's a problem with a
wire transaction. Legitimate lenders don't pressure you to wire funds.
- Independently verify the company - If you are not absolutely sure who you are dealing with, get the
company's number in the phone book or from directory assistance, and call it
to make sure you're dealing with the company you think you are. Check with
the Better Business Bureau ( www.bbb.org )
to see the company's record. Some scam
artists have even pretended to be the Better Business Bureau or another
How to report a loan scam
Loan Scam names
Other related information