Avoiding the Advance Fee Loan Scam

It is very good news that some guidelines for caution can really help people avoid advance fee loan scams. It is not the wealthy and established that are likely to be lured into this trap, but rather those who are under financial stress and most dependent upon the lost money. Those who will be hurt most severely by the scam are the most likely to be trapped.

Advance fee loans are a popular scam. Quite simple to understand, a person seeking a loan is promised that a suitable loan will be found, but a fee must be sent first. The loan shark receives the fee and the loan application is denied - end of story. In a previous article (SCAM: Advance Fee Loans) I discussed what advance fee loans are and how they are used to rip off people. Both U.S. and Canadian authorities say there is much that consumers can do to avoid being taken by these loan sharks.

The most general guidance to start with is that you must deal with established, local financial institutions that have proven track records when seeking loans. In this situation local references can be readily obtained.

Going beyond the general, there are more specific things to keep in mind.

Do not pay for the promise of a loan. It is illegal for a company doing business by phone to promise you a loan and ask you to pay for it before they deliver.

Ignore any ad, or even hang up on the telemarketer if the offer guarantees a loan in exchange for a fee in advance.

Legitimate lenders never guarantee or say that you will receive a loan before you apply, or before they have checked out your credit status.

Do not give your credit card, bank account, or Social Security number on the telephone, by fax or via the Internet unless you are familiar with the company and know why the information is necessary.

No legitimate lending organization would have you make the payment to an individual.

Legitimate lenders will not pressure you to wire funds through Western Union. You will have little recourse for recovering the transferred money if lost.