Consumer Fraud Reporting
Loan Scams
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Loan Scams
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:

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:

  1. 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;

  2. send a check or bank details so they can use it to make counterfeit checks that the scammers can use in other scams; and

  3. send money (loan application fees, down payments, etc.)

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 never materializes.

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 via 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, http://www.Disney.com, 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 link.
  • 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 credit record.
  • 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, Money Gram 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 legitimate organization.

How to report a loan scam


Loan Scam names

  • EducationalDirect.net

Other related information


Copyright CFR 2005, 2006, 2007, 2008, 2009  - Definition of scam, fraud, etc.Legal disclaimer / corrections / complaints  -  Privacy Policy
Names used by scammers in the examples on this page and others often belong to real people and businesses who often have no knowledge of nor connection to the scammer's use of their name and information.  Sample scam emails and other documents are copies of the scam to help potential victims recognize and avoid it.  You should presume that any names used and presented here in a scam are either fictitious or used without their legitimate owner's permission.
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