Jun 30, 2008 2:28 pm US/Eastern
Advance-Fee Loan Scams: What To Look Out For
BOSTON (WBZ) ―
Like a lot of people these days, Sherri Lewis is having a tough time staying on top of her bills. She always managed to stay ahead of things, but recently, life got a tougher and she needed some help. "We've been behind on things. We were not able to get a loan through the bank because of credit reasons," she explained.
Then she found an offer online that promised to lend her money in spite of her credit history. She contacted the company and quickly received a letter telling her she qualified.
Sherri immediately started to dream about what she could do with the cash. "Pay off some past debt and then be able to fix up our house a little bit and have some good times with our kids this year," she said.
The problem is there was a catch. Sherri had to send the lender some money up front and it was no small amount. She wired more than $1,000 to an account in Canada. Sherri grew suspicious when the company called asking for more. "So we decided that we didn't want to do it anymore and asked for our money back," she explained.
But the refund never came and the phone the company gave her was suddenly disconnected.
Sheila Adkins of the Better Business Bureau says this type of advance-fee loan was a popular rip-off years ago, but it's making a comeback. "In 2007, we've seen a 73 percent increase over 2006. This is a direct result of the credit crunch," she said.
Now there's a dangerous new twist to these rip-off loans. Experts now warn advance-fee loan sharks are now asking for something else upfront: lots of personal information.
The Better Business Bureau says you never give out your social security number, credit or banking information over the phone or internet. So how do you know if you're applying for a legitimate loan or falling for a scam? "Anytime you're talking to people…and they want any money before you get loan proceeds; that is against the law," said Stephen Baker of the Federal Trade Commission.
The FTC says these offers usually come from a classified ad, a Web site or direct mail, but you usually have to dial an 800 or 900 number to seal the deal. "If they ask you to wire the money through Western Union or Moneygram, run, run, run, cause you're gonna get robbed," Baker warned.
Experts say you should also be very wary of ads that are now popping up in newspapers and over the Internet that promise you a guaranteed loan despite your credit history. Any reputable company has to see your credit information before they can write a loan.
The FTC has more information about advance-fee warning scams on their
Web site.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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